The main obstacles to rice cultivation in Egypt and the world are lack of irrigation water and elevated temperatures, because rice production is extremely sensitive to water shortage; there is a need for the evolution of genotypes that are tolerant to drought. To this achieved, 21 F1 hybrids developed from seven parental genotypes using half diallel mating design and assessed under normal and water stress at Sakha Agricultural Research Station, Kafr El-Sheikh, Egypt. The grain yield and most traits significantly differ (p < 0.01) between genotypes and their partition; parents, crosses, and their interaction as well general combining ability (GCA) and specific combining ability (SCA). Water stress significantly reduced grain yield and all traits in parents and hybrids compared to normal conditions. Also, most parents and hybrids significantly favor GCA and SCA effects for grain yield and all traits, respectively. Best mean performances, stress tolerance index (STI) and desirable GCA effects are noticed by SaKha108, Giza179. Based on principal component analysis (PCA), these parents can be used for generating superior rice hybrids under water stress. The hybrid combinations Giza177 × Azucena, Sakha108 × Azucena and Giza179 × Azucena discovered to be good specific combiners for grain yield and majority traits under water stress. For all traits, there were strong correlations among F1 hybrids’ performance, SCA and heterosis estimations. The above genotypes and these traits correlated could be exploited for improving rice grain yield and drought tolerance in future breeding programs.