The unpredictability of drought patterns and the complexity of the physiological responses involved have made it difficult to characterize component traits required for improved performance, thus limiting crop improvement to enhance drought resistance. The various stress response mechanisms and options to enhance plant survival under severe stress do not usually translate into yield stability under water deficit. Increased crop yield and water productivity require the optimization of the physiological processes involved in the initial critical stages of plant response to soil drying, water-use efficiency, and dehydration avoidance mechanisms. New high-throughput phenotyping methodologies allow fast and detailed evaluation of potential drought-resistant donors and the large number of lines developed by drought breeding programs. Similarly, large collections of rice germplasm, including minicore sets, wild relatives, and mutant lines, are screened for drought-resistance traits. Genetic sources of drought resistance have now been identified for all major rice agroecosystems and some of the associated traits have been characterized. The identification and genetic mapping of QTLs for yield and related physiological traits under drought stress across environments are currently a major focus. This approach provides a powerful tool to dissect the genetic and physiological bases of drought resistance. If validated with accurate phenotyping and properly integrated in marker-assisted breeding programs, this will accelerate the development of drought-resistant genotypes. This paper reviews IRRI’s recent progress and achievements in understanding the physiology of drought resistance in rice and presents future perspectives on the genetic enhancement of drought adaptation.