Water deficit is the major abiotic constraint affecting crop productivity in peanut (Arachis hypogaea L.). Water use efficiency under drought conditions is thought to be one of the most promising traits to improve and stabilize crop yields under intermittent water deficit. A transcription factor DREB1A from Arabidopsis thaliana, driven by the stress inducible promoter from the rd29A gene, was introduced in a drought-sensitive peanut cultivar JL 24 through Agrobacterium tumefaciens-mediated gene transfer. The stress inducible expression of DREB1A in these transgenic plants did not result in growth retardation or visible phenotypic alterations. T3 progeny of fourteen transgenic events were exposed to progressive soil drying in pot culture. The soil moisture threshold where their transpiration rate begins to decline relative to control well-watered (WW) plants and the number of days needed to deplete the soil water was used to rank the genotypes using the average linkage cluster analysis. Five diverse events were selected from the different clusters and further tested. All the selected transgenic events were able to maintain a transpiration rate equivalent to the WW control in soils dry enough to reduce transpiration rate in wild type JL 24. All transgenic events except one achieved higher transpiration efficiency (TE) under WW conditions and this appeared to be explained by a lower stomatal conductance. Under water limiting conditions, one of the selected transgenic events showed 40% higher TE than the untransformed control.