Development of drought-tolerant cultivars is hampered by a lack of effective selection criteria. In this research, drought tolerance of 75 genotypes of tall fescue in three sets (25 parental, 25 early, 25 late-flowering progenies) was evaluated under no soil moisture stress and soil moisture stress in the field during 2009 and 2010. Five drought-tolerance indices were calculated: stress tolerance (TOL), mean productivity (MP), geometric mean productivity (GMP), stress susceptibility index (SSI), and stress tolerance index (STI). These calculations were based on forage yield (dry matter basis) under drought (Ys) and non-drought (Yp) conditions. Soil moisture stress caused significant reduction in forage yield. Considerable genetic variation for drought tolerance was found among genotypes. A moderately high relationship was found between Yp and Ys using regression analysis, with a clear relationship in the second year. Indices GMP and STI were found to be valuable aids in the selection of drought-tolerant, high-yielding genotypes. Plots of the first and second principal components identified drought-tolerant genotypes in each set. Results indicated that selection for drought-tolerant genotypes should be planned separately for first year (establishment stage) and second year (productive stage) in tall fescue.