To tolerate water deficits, some plants osmotically adjust their cells to maintain both turgor and water potential gradient. In this study four cotton genotypes were characterized in relation to their osmotic adjustment, photosynthetic rate, relative water content, carbon discrimination and other physiological parameters. The results of this study have been used to guide our work in the molecular characterization and gene isolation in these same genotypes by Differential Display (RT-PCR). Cultivars Siokra L-23 and the wild type (T-1521) presented higher water deficit tolerance when compared with CS 50 and Stoneville 506. Osmotic adjustment, higher photosynthetic rate, and higher carbon discrimination played a key role in these results.