The vast genetic resources of wild barley (Hordeum vulgare ssp. spontaneum, hereafter WB) may hold unique assets for improving barley (H. vulgare ssp. vulgare) cultivars for drought stress. To evaluate genetic potential and characterization of variation among a diverse collection of barley and WB genotypes, mostly originated from Iran, a field experiment was performed under three moisture environments (control, mild and intense drought stress) during two years (2012–2014). Considerable variation was observed among the wild and cultivated genotypes for drought tolerance and agronomic traits. Principal component analysis (PCA) grouped genotypes studied into three groups (WB, two-row barley and six-row barley groups). However, Iranian and foreign WB genotypes were not completely separated, showing a high variation within both gene pools. The high significance of genotype by environment interaction, confirms importance of using accurate target environments for drought stress breeding. A number of WB genotypes with the highest values of the number of tillers, number of seed per spike, seed weight, grain yield and yield stability index under stressed environments were identified as superior genotypes. Most of these genotypes originate from Iran, highlighting the importance of this germplasm in barley breeding.