Plant growth promoting rhizobacteria (PGPR) have the potential to promote plant growth under extreme environmental conditions. The purposes of the present study were first to isolate and identify drought tolerant ACC deaminase producing PGPR from rhizosphere soil of cluster bean (Cyamopsis tetragonoloba), and second to study the effect of selected bacterial isolates on plant growth, nodulation and soil properties of cluster bean under drought. Rhizosphere bacterial isolates were tested for their drought tolerance ability, ACC deaminase activity and other PGP attributes such as the production of indole-3-acetic acid (IAA), ammonia, HCN, siderophore and phosphate solubilization. The selected isolates were identified by 16S rRNA sequencing analysis. These selected isolates were further evaluated for plant growth promoting traits and other attributes, such as ethylene emission, osmolytes accumulation, nutrients uptake, soil nutrient availability and soil enzymes activities under drought stress. Three isolates were positive for ACC deaminase activity and identified as Bacillus sonoresis (KM1), Psuedomonas stutzeri (AK17) and Paenibacillus polymyxa (KM6). Under drought stress, inoculation with AK17 and KM6 isolates significantly improved plant growth, RWC and lowered the ethylene emission as compared to uninoculated plants. These isolate also helped in mitigating the adverse effects of drought stress in Cyamopsis by enhancing the accumulation of proline, glycine betaine and decreasing lipid peroxidation. Availability of soil nutrients and soil enzymes activities were also increased in treated plants. These findings show that isolates AK17 and KM6 helps in improving tolerance of cluster bean seedling and can act as potent bioinoculants for crops cultivated under water-stressed conditions.