Consistent gains in grain yield in dry environments have been made by empirical breeding although there is disturbing evidence that these gains may have slowed. There are few examples where an understanding of the physiology and the genetics of putative important drought-related traits has led to improved yields. Success will first depend on identifying the most important traits in the target regions. It will then depend on accurate and fast phenotyping, which, in turn, will lead to: (1) trait-based selection being immediately transferable into breeding operations and (2) being able to identify the underlying genes or the important genomic regions (quantitative trait loci), perhaps leading to efficient marker-based selection (MBS). Genetic complexity, extent of genotype × environment (G × E) interaction and sampling cost per line will determine value of phenotyping over MBS methods. Here, we review traits of importance in dry environments and review whether molecular or phenotypic selection methods are likely to be the most effective in crop improvement programs and where the main bottlenecks to selection are. We also consider whether selection for these traits should be made in dry environments or environments where there is no soil water limitation. The development of lines/populations for trait validation studies and for varietal development is also described. We firstly conclude that despite the spectacular improvements in molecular technologies, fast and accurate phenotyping remains the major bottleneck to enhancing yield gains in water-limited environments. Secondly, for most traits of importance in dry environments, selection is generally conducted most effectively in favourable moisture environments.