Drought stress adversely affects the growth and yield of wheat. The present study was planned to investigate the effect of inoculation of plant-growth promoting rhizobacteria (PGPR) strains IG 3 (Klebsiella sp.), IG 10 (Enterobacter ludwigii) and IG 15 (Flavobacterium sp.) in improving drought tolerance in wheat. These PGPR strains were screened for drought tolerance in nutrient broth supplemented with different concentrations (0-25%) of polyethylene glycol (PEG6000). Effect of PGPR inoculation on various physiological, biochemical parameters and gene expression of stress responsive genes were studied under drought stress. Root colonization at the surface and interiors of roots was demonstrated using scanning electron microscopy (SEM) and tetrazolium staining, respectively. Drought stress significantly affected various growth parameters, water status, membrane integrity, osmolyte accumulation and stress-responsive gene expressions, which were positively altered by PGPR-inoculation in wheat. Quantitative real-time (qRT)-PCR analysis revealed the up regulation of some stress-related genes (DREB2A and CAT1) in un-inoculated wheat plants exposed to drought stress. PGPR-inoculated plants showed attenuated transcript levels suggesting improved drought tolerance due to interaction of PGPRs. The PGPR strain IG 3 was found to be the best in terms of influencing biochemical and physiological status of the seedlings under drought stress. Our report demonstrates the role of PGPRs Enterobacter ludwigii and Flavobacterium sp. in plant growth promotion of wheat plants under drought stress. The study reports the potential of PGPR in alleviating drought stress in wheat which could be used as potent biofertilizers.