Lotus corniculatus L. is a perennial forage legume species highly-adapted to growth under drought conditions. However, the genetic and physiological mechanisms involved in its adaptive capacity have not been elucidated. The role of osmotic adjustment (OA) and water-use efficiency (WUE) on the drought tolerance of L. corniculatus was studied in a greenhouse experiment. Seven cultivars of different origin were subjected to two contrasting treatments of available soil water: No water stress (NWS) and with water stress (WWS). Xylem water potential (&#936;x), osmotic potential (&#936;&#960;), pressure potential (&#936;p), relative water content (RWC), stomatal conductance (g s), shoot DM production, water transpiration (T), and WUE (shoot DM/T) were measured. Water treatments significantly (P < 0.05) affected plant water status, which was reflected in reduced &#936;x, RWC, g s, and transpiration rate in the WWS treatment compared with the NWS treatment. All cultivars showed a high capacity for OA under WWS treatment because &#936;&#960; decreased by approximately 60% and &#936;p increased by approximately 30%, compared with the NWS treatment. Cultivars with a higher solute accumulation (low &#936;&#960; value) had the lowest DM production under WWS treatment. In contrast, WUE varied greatly among cultivars and was positively associated (R² = 0.88; P < 0.01) with DM production under drought conditions.