Because sorghum is a drought-tolerant crop, it is often preferred by producers in cases of expected water stress. The objectives of this review were to summarize the water requirements, effect of water stress, and hybrid variation in drought tolerance of grain sorghum, and to suggest possible solutions that could help narrow the gap between potential and actual dryland sorghum yield. We reviewed more than 70 reports in peer-reviewed journals, extension publications, books, and websites. Grain sorghum tolerates and avoids drought more than many other cereal crops, but the drought response of sorghum does not come without a yield loss. Water stress at the vegetative stage alone can reduce yield more than 36%, and water stress at the reproductive stage can reduce yield more than 55%. Eighty percent of sorghum production in the world is under dryland conditions. We deduced that by focusing on techniques that can improve water availability in sorghum growing season alone, we can double the current dryland sorghum yield with the existing genetic potential. Results of this review suggest the existence of genotypic variation in drought tolerance among sorghum hybrids due to possible physiological differences or vice versa. We concluded by presenting possible management options to reduce the effects of water stress in dryland conditions and suggesting possible areas of research.