Stomatal traits and carbon isotope discrimination (CID, ∆13C) are important determinants of photosynthetic efficiency and water relations in crop plants. To understand soil moisture stress response and grain yield variations, 11 lines were selected for grain yield from the tails of a distribution of a doubled haploid (DH) bread wheat population derived from Carberry crossed with AC Cadillac. Various physiological traits were studied under 8 growth environments (irrigated and rainfed; 4-yearstudy). The lines, B0767&AG075 (registered as AAC Goodwin), B0767&AX125and B0767&BF109 with higher grain yield displayed lower stomatal conductance compared to the lines with low grain yield, especially under rainfed conditions. A significant variation was observed for adaxial and abaxial flag leaf stomatal density and size in these wheat lines grown in the greenhouse. For high yielding B0767&AG075, stomatal density was low on abaxial leaf surface (irrigated=73±3; drought=95±4) with little differences on adaxial surface when compared to low yielding lineB0767&AD028 (irrigated= 97±7; drought=105±5). In contrast, low yielding line B0767&AH156 had low stomatal density on both surfaces emphasizing the complexity of these traits and grain yield. Grain ∆13C positively correlated with grain yield under irrigated environment (R2=0.66; p<0.001), with poor correlation in dry environment (R2=0.29; p<0.05) during 2016-2018. A similar trend was observed for normalized difference vegetation index at grain filling stage in these wheat lines. Our results indicate that physiological and genetic understanding of stomatal and ∆13C traits could be the potential targets in wheat breeding programs for low moisture areas, providing avenues to minimize grain yield penalty under arid environments.