Plants accumulate a variety of organic osmoprotectant solutes in response to environmental stresses in order to cope with stress conditions. Of all these solutes, glycinebetaine appear to play a major role in conferring resistance to drought, salinity and temperature stresses. Moisture stress during the pod development stage remains as the most important limitation for soybean yields in most parts of USA. In 2004, we conducted pot-culture experiment to understand the effect of foliarly applied glycine betaine on water relations, physiology and yield of soybean. Three irrigation treatments [100 % well watered (WW); 60 %WW; and 40 %WW] and three betaine treatments (0, 2 and 4 kg/ha) as main and sub treatments were imposed. Results showed an increase in pod dry weights by 15% under both well-watered (WW) and mild water stress (60% WW) conditions and 8% under severe water stress (40 % WW) conditions with foliar application of glycinebetaine of 2 kg/ha. Increase in plant heights and leaf areas were observed, plants with glycine betaine treatment were 8-10 % taller than the untreated control irrespective of irrigation treatments. Leaf area did not differ with betaine treatments under well-watered condition; however, betaine treatment enhanced leaf area by 51% under mild water stress and 64% under severe water stress conditions. The increases observed in yield and pod numbers were due to enhanced plant growth (plant height and leaf area development). However, we did not find any significant differences in leaf water potentials, while, relative water content and cell membrane thermostability improved with betaine treatments under water stress treatments. Further studies are needed to understand the mechanism more clearly and the results so obtained can be used in developing breeding strategies for selection of varieties with higher glycinebetaine for drought tolerance in soybean.