The effects of increasing osmotic stress induced by 100–400 mOsm (-0.976 MPa) polyethylene glycol (PEG 6000) were investigated in a drought-tolerant (Triticum aestivum L. cv. Mv Emese) and drought-sensitive (cv. GK Élet) wheat cultivar at the three-leaf stage. During osmotic stress, the decline of the water potential (ψw) was more significant in the leaves, while the abscisic acid (ABA) levels of the roots increased earlier and remained higher in the sensitive than in the tolerant variety. There was an increasing gradient of ABA content toward the youngest leaves in the drought-sensitive GK Élet, while more ABA accumulated in the fully developed, older leaves of the tolerant cultivar Mv Emese. In accordance with the rapid and significant accumulation of ABA, the stomatal conductance decreased earlier in the tolerant cultivar. The effect of water stress on the PSII photochemistry was pronounced only 1 week after the exposure to PEG, as indicated by the earlier decrease of the net CO2 fixation, the effective quantum yield (ΦPSII) and the photochemical quenching (qP) in light-adapted samples of the tolerant variety in 400 mOsm PEG 6000. The stress treatment caused more significant reductions in these parameters toward the end of the experiment in the sensitive cultivar. In spite of small differences in the photosynthetic characteristics, the net biomass production was not significantly altered by this osmotic stress. The accumulation of ABA controlled the distribution of the biomass between the shoot and root systems under osmotic stress, and contributed to the development of stronger and deeper roots in the drought-sensitive cultivar GK Élet. However, the root elongation did not correlate with the drought sensitivity of these cultivars on the basis of crop yield.