Drought is one of the major abiotic stresses limiting crop productivity in arid and semi-arid regions and influences many aspects of plant development. Groundnut (Arachis hypogaea L.) is an important oil yielding crop and considered as relatively drought tolerant. In this study, two groundnut cultivars were first tested for their drought tolerance based on physiological marker attributes such as relative water content, total chlorophyll content, cell membrane stability and free proline content and identified cultivar K-134 as a drought tolerant and cultivar JL-24 as drought susceptible. To gain a better understanding of the drought stress responses at molecular level, we carried out a genomic analysis of stress-responsive genes/transcripts in drought-tolerant cultivar K-134. As a first step toward characterization of stress-responsive genes, construction and analysis of subtracted cDNA library from droughttolerant cultivar (K-134) is reported here. Using this strategy a total of 200 ESTs were isolated, sequenced, of which 120 high-quality ESTs were obtained and clustered. Further, our analysis revealed that 31% sequences were unique and no homology to known proteins in the database. This observation has great relevance since groundnut is a stress-adapted legume crop. Further, to validate the identified differentially expressed genes, expression profiles of selected clones were analyzed using dot blot (reverse northern), northern blot analysis. We showed that these clones are differentially expressed under different abiotic stress conditions. The implications of the analyzed genes in abiotic stress tolerance were discussed.