Water deficit is a pivotal abiotic stress that detrimentally constrains rice growth and production. Thereupon, the development of high-yielding and drought-tolerant rice genotypes is imperative in order to sustain rice production and ensure global food security. The present study aimed to evaluate diverse exotic and local parental rice genotypes and their corresponding cross combinations under water-deficit versus well-watered conditions, determining general and specific combining ability effects, heterosis, and the gene action controlling important traits through halfdiallel analysis. In addition, the research aimed to assess parental genetic distance (GD) employing simple sequence repeat (SSR) markers, and to determine its association with hybrid performance, heterosis, and specific combining ability (SCA) effects. Six diverse rice genotypes (exotic and local) and their 15 F1 hybrids were assessed for two years under water-deficit and well-watered conditions. The results revealed that water-deficit stress substantially declined days to heading, plant height, chlorophyll content, relative water content, grain yield, and yield attributes. Contrarily, leaf rolling and the sterility percentage were considerably increased compared to well-watered conditions. Genotypes differed significantly for all the studied characteristics under water-deficit and wellwatered conditions. Both additive and non-additive gene actions were involved in governing the inheritance of all the studied traits; however, additive gene action was predominant for most traits. The parental genotypes P1 and P2 were identified as excellent combiners for earliness and the breeding of short stature genotypes. Moreover, P3, P4, and P6 were identified as excellent combiners to increase grain yield and its attributes under water-deficit conditions. The hybrid combinations; P1  P4, P2  P5, P3  P4, and P4  P6 were found to be good specific combiners for grain yield and its contributed traits under water-deficit conditions. The parental genetic distance (GD) ranged from 0.38 to 0.89, with an average of 0.70. It showed lower association with hybrid performance, heterosis, and combining ability effects for all the studied traits. Nevertheless, SCA revealed a significant association with hybrid performance and heterosis, which suggests that SCA is a good predictor for hybrid performance and heterosis under water-deficit conditions. Strong positive relationships were identified between grain yield and each of relative water content, chlorophyll content, number of panicles/plant, number of filled grains/panicle, and 1000-grain weight. This suggests that these traits could be exploited as important indirect selection criteria for improving rice grain yield under water-deficit conditions.