This study was carried out at Shandaweel Agric. Res. Station, during 1998/99, 99/2000 and 2000/2001 wheat growing seasons. It aimed to estimate observed and expected responses to selection and other genetic parameters under normal and drought conditions. Two populations of bread wheat were used in the F2, F3 and F. generations. The results showed that the values of observed responses for selection to high yield were higher than that for selection to low yield and the observed responses was less than the expected responses for yield and yield components. Broad sense heritability under the two environments were high for all studied characters, while the narrow sense one under drought stress ranged from 34.31 to 47.38 % for days to heading, from 23.39 to 42.78 % for flag leaf water loss, from 31.25 to 42.78 % for number of spikes/plant, from 27.63 to 42.41 % for number of kernels/spike, from 31.72 to 40.33 % for 100-kernel weight and from 19.13 to 39.63 % for grain yield/plant. The respective realized heritabilities ranged from 51.82 to 59.64 %, 61.87 to 79.28 %, 32.45 to 48.84 %, 17.43 to 23.19 %, 42.89 to 57.14 % and 31.03 to 39.90 % for the same characters. These results showed that pedigree method of selection was effective to produce new lines tolerant to drought stress.