Essential in the Green Revolution was the development of high-yielding dwarf varieties of rice (Oryza sativa L.), but their selection was not based on responses to water limitation. We studied physiological responses to progressive drought of the dwarf rice mutant, d1, in which the RGA1 gene, which encodes the GTP-binding α-subunit of the heterotrimeric G protein, is non-functional. Wild-type (WT) plants cease net carbon fixation 11 days after water is withheld, while d1 plants maintain net photosynthesis for an additional week. During drought, d1 plants exhibit greater stomatal conductance than the WT, but both genotypes exhibit the same transpirational water loss per unit leaf area. This is explained by a smaller driving force for water loss in d1 owing to its lower leaf temperatures, consistent with its more erect architecture. As drought becomes more severe, WT plants show an accelerated decline in photosynthesis, which may be exacerbated by the higher leaf temperatures in the WT. We thus show how a rice mutant with dwarf and erect leaves has a decreased susceptibility to water stress. Accordingly, it may be useful to incorporate RGA1 mutation in breeding or biotechnological strategies for development of drought-resistant rice.