This study was conducted to investigate the physiological response of sugarcane genotypes to drought and its consequence for stalk yield. Sugarcane genotypes IACSP94-2094, IACSP96-2042 and SP87-365 were subjected to water deficit during the initial growth phase by withholding water. Resistance and sensitivity patterns were defined by the impact of drought on the stalk yield and content of soluble solids in the stalk juice. IACSP94-2094 and SP87-365 were considered drought-resistant genotypes, as the stalk dry matter production and yield of soluble solids were not reduced by the water deficit. Although drought caused reductions in leaf gas exchange in all the genotypes, IACSP96-2042 was most affected when considering the cumulative reduction in photosynthesis throughout the experimental period. This photosynthetic impairment of IACSP96-2042 was related to both non-stomatal and stomatal limitations, whereas photosynthesis in SP87-365 and IACSP94-2094 were only stomatally limited under drought. In general, a reduced photosynthetic sensitivity to water deficit was an important physiological trait for dry matter production in sugarcane plants, and the concentrations of soluble carbohydrates, sucrose, starch and proline in the leaves did not reveal consistent differences between the patterns of resistance and sensitivity. Even though IACSP96-2042 was severely affected by water shortage, this genotype presented a similar stalk yield under drought and the highest stalk yield under well-watered conditions when compared to the other genotypes. This response to variable water conditions is interesting for regions with seasonal drought, whereas the pattern of drought resistance is more appropriate for regions in which drought occurs for long periods during the crop season. Our findings are also discussed from the point of view that increases in sugarcane yield and sustainable agriculture may be reached by choosing the best genotype for each specific environmental condition.