Drought poses a significant ecological threat that limits the production of crops worldwide. The objective of this study to examine the impact of soil applied biochar (BC) and peatmoss (PM) on the morpho-biochemical and quality traits of tobacco plants under drought conditions. In the present experiment work, a pot trial was conducted with two levels of drought severity (~ well-watered 75 ± 5% field capacity) and severe drought stress (~ 35 ± 5% field capacity), two levels of peatmoss (PM) @ 5% [PM+ (with peatmoss) and PM- (without peatmoss)] and three levels of rice straw biochar (BC0 = no biochar; BC1 = 150 mg kg− 1; and BC2 = 300 mg kg− 1 of soil) in tobacco plants. The results indicate that drought conditions significantly impacted the performance of tobacco plants. However, the combined approach of BC and PM significantly improved the growth, biomass, and total chlorophyll content (27.94%) and carotenoids (32.00%) of tobacco. This study further revealed that the drought conditions decreased the production of lipid peroxidation and proline accumulation. But the synergistic approach of BC and PM application increased soluble sugars (17.63 and 12.20%), soluble protein (31.16 and 15.88%), decreased the proline accumulation (13.92 and 9.03%), and MDA content (16.40 and 8.62%) under control and drought stressed conditions, respectively. Furthermore, the combined approach of BC and PM also improved the leaf potassium content (19.02%) by limiting the chloride ions (33.33%) under drought stressed conditions. Altogether, the balanced application of PM and BC has significant potential as an effective approach and sustainable method to increase the tolerance of tobacco plants subjected to drought conditions. This research uniquely highlights the combined potential of PM and BC as an eco-friendly strategy to enhance plant resilience under drought conditions, offering new insights into sustainable agricultural practices.