The study assessed three Egyptian wheat genotypes under varying irrigation levels, including full irrigation (I100%) and drought conditions (I80% and I60% of crop evapotranspiration, ETC). Field experiments were carried out at the experimental farm of the Faculty of Agriculture, Fayoum University, Egypt, throughout the 2020–2021 and 2021–2022 growing seasons. Positive correlations with grain yield were observed under optimal irrigation, emphasizing the importance of traits such as plant height, spike length, and grain weight per spike. Mild stress conditions (I80%) revealed significant associations with tiller-related traits, spike characteristics, and yield components, while severe stress conditions (I60%) demonstrated robust positive correlations with all traits except total tiller number (NTT). Specific traits, including NTT and NSM2, exhibited positive direct effects on grain yield, while others, such as plant height (PH), had unfavorable direct effects. Positive indirect impacts on grain yield were identified through various pathways. Harvest Index (HI %) and biological yield per feddan (BYF) were pivotal under water stress (I80%), with positive indirect effects observed. Severe water stress (I60%) highlighted the substantial impact of HI% and positive indirect effects for other traits. The study recommends focusing on these key traits for genetic enhancements to enhance grain yield in bread wheat varieties under varying environmental conditions.