Tef [Eragrostis tef (Zucc.) Trotter] is a staple food crop in Ethiopia, and has become known globally as a health food for its gluten‐free flour, which also has a unique nutritional profile. A key to successful variety development through designed breeding is the use of diverse genetic resources, especially when breeding for complex traits such as tolerance to drought stress. The objective of this study was to assess the response of genetically diverse populations of tef genotypes for yield and yield components, with special emphasis on drought‐stress tolerance, to select promising parents for breeding. One hundred forty‐four tef genotypes were evaluated, involving four experiments representing optimum moisture and drought‐stressed environments. Data from the non‐stressed and drought‐stressed environments were subjected to multivariate analysis, including principal component analysis (PCA) and cluster analysis. Days‐to‐maturity, plant height, panicle length, and panicle seed weight were positively correlated with grain yield in non‐stressed conditions, while these traits had negative correlations with grain yield under drought‐stressed conditions. The genotypes DZ‐Cr‐387, DZ‐01‐787, DZ‐01‐3186, 9432, 9403, 9415, 205917, 205896, 215678, 213237, Jano, Kaye‐Agachew, Purpurea, Kaye‐Murri, and Dschanger were selected as promising parents with superior grain yields, low levels of lodging, tall plant height and long panicles in a non‐stressed environment. Conversely, the genotypes DZ‐Cr‐385, DZ‐Cr‐37, HO‐Cr‐136, DZ‐01‐2053, Dabbi, 207832, Zagure, and Shawa‐Gemerra were selected as superior parents for their early maturity and good yield performances under drought stress.