The traditional drought tolerant cultivar ARC 10372 was crossed with a high yielding, drought susceptible elite rice variety Ranjit for the development of advanced breeding lines under drought stress. A total of 36 F2 plants carrying tolerant parent allele for the major grain yield QTL under drought stress (qDTY1.1) were identified using SSR marker RM 431 and RM 11943. These plants were selected to raise F2: 3 population and evaluated for root and yield traits. The maximum root length ranged from 9 to 44 cm and 6 deep rooted F lines were selected under drought stress. Whereas only 4 F lines were 2: 32: 3 selected on the basis of various yield traits under rainfed conditions. A total of 10 F2: 4 lines consisting of 217 F4 plants were evaluated for yield traits under drought stress and irrigated condition. Higher broad-sense heritability for grain yield and its component traits was observed under drought stress conditions, therefore, used as a selection criterion. One line (A-78) was selected on the basis of improved yield and grain quality traits under F2: 4 drought stress and may be used in the development of drought tolerant rice variety in elite genetic background.