Water use efficiency (WUE) is physiologically linked to discrimination of the stable isotope of carbon (Δ13C) in leaves of plant species. We determined the genetic variability in WUE by gravimetric approach and Δ13C among 34 diverse germplasm accessions of rice (Oryza sativa L.). The leaf Δ13C ranged between 18.7 and 21.6‰, representing a significant variability and showed a strong inverse relationship with WUE. The gravimetrically determined WUE represents time integrated values, and hence its regression with Δ13C strongly proves the relevance of Δ13C as a surrogate for WUE in rice. For a trait to be successfully exploited for crop improvement, it should have low genotype × environment (G × E) interaction. Six contrasting genotypes selected and examined in a separate experiment showed good correspondence in both WUE and Δ13C between the experiments indicating that WUE is genetically controlled in rice and hence can be exploited through breeding. A prior knowledge on the constituent physiological factors controlling WUE is an important prerequisite for exploiting this trait in crop improvement programs. An inverse relationship between WUE and mean transpiration rate (MTR) indicates a stomatal control of WUE among rice genotypes. Although total biomass normally decreases while selecting for high WUE from among conductance types, a few promising genotypes with high WUE coupled with moderately high total biomass can still be identified for further crop improvement.