Drought is one of the most serious production constraint for world agriculture and is projected to worsen with anticipated climate change. Inter-disciplinary scientists have been trying to understand and dissect the mechanisms of plant tolerance to drought stress using a variety of approaches; however, success has been limited. Modern genomics and genetic approaches coupled with advances in precise phenotyping and breeding methodologies are expected to more effectively unravel the genes and metabolic pathways that confer drought tolerance in crops. This article discusses the most recent advances in plant physiology for precision phenotyping of drought response, a vital step before implementing the genetic and molecular-physiological strategies to unravel the complex multilayered drought tolerance mechanism and further exploration using molecular breeding approaches for crop improvement. Emphasis has been given to molecular dissection of drought tolerance by QTL or gene discovery through linkage and association mapping, QTL cloning, candidate gene identification, transcriptomics and functional genomics. Molecular breeding approaches such as marker-assisted backcrossing, marker-assisted recurrent selection and genome-wide selection have been suggested to be integrated in crop improvement strategies to develop drought-tolerant cultivars that will enhance food security in the context of a changing and more variable climate.