Drought stress is the most prevalent environmental factor limiting wheat productivity globally and demands integration of new plant improvement approaches. Plant tissue culture, being a mutagenic process induces somaclonal variations, which can be manipulated for improving drought tolerance of wheat. An in vitro selection system was employed to regenerate PEG-6000 tolerant callus lines into R1 somaclones. Comparative morpho-physiologcial responses of R1 somaclones and explant donor parent cultivar to osmotic stress were studied at seedling and booting stages by inducing artificial drought stress along with the control of unstressed. Both R1 somaclones and explant donor parent exhibited differential responses to drought stress at both growth stages and the selected somaclones were less affected by drought stress over their donor parent. At seedling stage, the R1 somaclones exhibited significantly higher root length, shoot length, root to shoot length ratio and relative water contents (RWC) under PEG- 6000 induced osmotic stress. Similarly, at booting stage the R1 somaclones accumulated significantly higher proline, protein, sugar and potassium ion (K+) contents and maintained higher membrane stability index (MSI) than the original cv. GA-2002 under drought stress conditions. The results revealed that the R1 somaclones of wheat regenerated from PEG-6000 tolerant calli have better drought tolerance than the explant donor parent cv. GA-2002, suggesting that in vitro immature embryo culture can be employed to produce drought tolerant plants of wheat.