Groundnut (Arachis hypogaea L.), commonly known as peanut, is an essential legume crop widely cultivated in semi-arid regions, contributing significantly to global food security and agricultural economies. However, environmental stresses, particularly drought, often reduce its productivity, affecting both yield and quality. This study aimed to evaluate the genetic diversity and drought tolerance of groundnut genotypes using SSR markers associated with drought tolerance traits. The SSR analysis identified 365 alleles across 40 markers, averaging 3.38 alleles/ locus. Polymorphism information content (PIC) values ranged from 0.22 to 0.82, indicating substantial genetic variation. Cluster analysis revealed an average genetic similarity of 0.61 among genotypes, indicating significant genetic diversity. The study also assessed the impact of drought stress during full flowering on yield traits. Under well-watered conditions, LC3 and LC2 varieties performed best, while drought stress significantly reduced pod formation and individual plant yield across all genotypes. Reductions reached up to 42.64% for filled pods/plant (LC5) and 38.85% for individual yield (LC7), demonstrating considerable variability in drought responses among genotypes. These findings highlight the genetic basis of drought tolerance in groundnuts and underscore the potential of marker-assisted selection in breeding programs to enhance drought resilience. This research supports the development of drought-resistant peanut varieties, contributing to sustainable agriculture and global food security initiatives.