Water deficit significantly reduces yield potential of peanut ( Arachis hypogaea L.) worldwide. This study investigated the effect of water regime on yield, grade, and oil composition of eleven peanut genotypes in a sub-humid environment. Water regimes were achieved by covering the plots from mid-July to early Sep with rainout shelters and irrigating the plots to pre-determined levels: well-watered (WW) regime received full irrigation of 40 mm weekly, moderate deficit (MD) 17 mm weekly, and severe deficit (SD) only 40 mm in one “survival” irrigation in late Aug. Results showed that MD and SD negatively impacted peanut yield and grade, with consequent reduction of the economic value. Compared with WW, economic value was 24% less under MD and 68% less under SD. Small seeded runner cultivars, ‘Florida 07’ and ‘Georgia 06G’, had higher yield and grade than Virginia-type cultivars under deficit irrigation, in particular under SD. Among the Virginia-type, ‘Sugg’ had highest yields under SD but was out yielded by ‘Bailey’ and ‘Phillips’ under MD. ‘Wynne’ and ‘Spain’ are the largest seeded Virginia-type cultivars; they performed poorest for yield and grade. Water deficit reduced the relative proportion of oleic (C18:1), and increased linoleic (C18:2) fatty acid and total saturated oils of the seeds with intensities depending on the genotype. Finally, the rainout setting used provided comparative results with real farm peanut production in the region; this is important for breeding programs in Virginia and Carolinas, where rainfall unpredictability does not allow for drought screening in an open field setting.