Physiological mechanisms that can contribute to drought tolerance and the role of potassium fertilization in cotton were studied by evaluation of parameters describing photosynthetic performance. Gas-exchange and chlorophyll fluorescence characteristics were measured on leaves of two cotton genotypes, one drought sensitive (Nazilli 84-S) and the other drought tolerant (Sahin 2000), grown in field conditions in the Aegean region of Turkey under different regimes of water and potassium supply. It was shown that under drought conditions without potassium fertilization Sahin 2000 had a higher photosynthetic rate and stomatal conductance than Nazilli 84-S. Potassium fertilization to a great extent compensated for the inhibitory effect of drought on photosynthesis. Application of the JIP test by using chlorophyll fluorescence data revealed that the drought sensitive Nazilli 84-S was more responsive to potassium fertilization than Sahin 2000, as judged by a number of parameters representing quantum efficiency of the processes and energy fluxes in photosystem (PS) II. The observed decrease in photosynthetic CO2 assimilation in both cotton cultivars under drought conditions was not accompanied by any significant decrease in the electron transport flux in PSII and maximum quantum yield of primary photochemistry.