Drought stress is a serious problem around the globe and particularly in the Republic of Iraq. Rice is the third most consumed crop for the Iraqi people; however, its cultivation and production is very low due to several challenges including drought. The current study was performed to evaluate five Iraqi rice cultivars along with relevant (drought-tolerant and drought-susceptible) controls under drought stress, either by treatment with 10% PEG (polyethylene glycol) or through water withholding to induce natural drought stress. The phenotypes of all the cultivars were evaluated and the transcriptional responses of key drought-responsive candidate genes, identified through the EST-SSR marker-based approach, were studied. We also studied transcript accumulation of drought-related transcriptional factors, such as OsGRASS23, OsbZIP12, and OsDREB2A. Moreover, the reference cultivars also included a drought-tolerant inter-specific cultivar Nerica 7 (a cross between Oryza sativa ssp. indica X O. glaberrima). Among the cultivars, the more drought-tolerant phenotypic characteristics and higher transcript accumulation of drought-related marker genes OsE647 and OsE1899 and transcriptional factors OsGRASS23, OsbZIP12, and OsDREB2A were observed in four (out of five) significantly drought-tolerant Iraqi cultivars; Mashkab, followed by Furat, Yasmen, and Amber 33. On another note, Amber Barka was found to be significantly drought susceptible. Mashkab and Amber Barka were found to be the most drought-tolerant and-susceptible cultivars, respectively. The identified tolerant cultivars may potentially serve as a genetic source for the incorporation of drought-tolerant phenotypes in rice.