Irrigation water is the basic resource to exploit the potential of cotton crop under an arid or a semi-arid environment. Under limited water conditions, various compatible solutes like glycinebetaine are being used to ameliorate the drought stress. Exogenous application of glycinebetaine (GB): GB1 (100 mg L−1), GB0 (no application) was done in adequate water (DS0) and in drought stress condition (DS1) at arid environment during the growing seasons of years 2009 and 2010. Results demonstrated that application of GB improved the physiological processes of crop leading to better crop performance. Exogenous application of GB increased the drought tolerance with remarkable improvement in photosynthetic process and exhibited higher growth and yield. It was further noted that this technique was economically sustained; predicted higher radiation and water-use-efficiency; and can be applied in limited water condition to avoid yield losses.