Safflower is known as a tolerant plant to abiotic stress factors. This study was conducted to introduce some physiological indices to improve drought-tolerant safflower genotypes for cultivation in marginal and arid areas. Six safflower genotypes were studied for two years (2017–2019) in the East Azarbaijan Agricultural and Natural Resources Research and Education Centre of Iran under non-stressed and low-water conditions from flowering to seed maturity. The occurrence of water deficits led to a significant decrease in relative water content (RWC), stomatal conductance (gs), osmotic adjustment (Oadj), water potential (WP) and agronomic water use efficiency (WUEa) and an increase in the water stress index (CWSI). In addition, the values of these traits differed significantly between the safflower genotypes. The correlations between the physiological traits and seed yield were significant. The regression relationships between seed yield and the above traits showed that CWSI, WP and WUEa had a strong relationship with seed yield under normal (R2 = 0.854, 0.801 and 0.856, respectively) and water deficit conditions (R2 = 0.931, 0.877 and 0.900, respectively). It can be concluded that the CWSI, WP and WUEa indices are able to select high-yielding and drought-tolerant safflower genotypes for the late season. Among the components of seed yield, the number of capitula per plant (r = 0.86) and seeds per capitula (r = 0.92), which were positively and significantly correlated with seed yield, played the main roles in the formation of seed yield. The Golemehr and Mec.295 genotypes achieved higher seed yields under normal (4676 and 4961 kg h−1, respectively) and water deficit conditions (3211 and 3385 kg h−1, respectively) and can be recommended for cultivation in marginal and arid areas.