Growth inhibitor Paclobutrazol (PBZ) is a triazol, reported to be of the potential to protect plants against several environmental stresses. This study was conducted to evaluate the alleviatory role of paclobutrazol under water stress conditions. Treatments were drought stress (100% and 40% of potential evapotranspiration) and through soil application PBZ (0, 0.25 and 0.75 gr a.i. pot-1) Three years old olive cultivars `Bladi’ and `Mission’ grown in 16 liter polyethylene pots in clay loam soil were employed. A factorial experimental design, based on randomized complete block design (RCBD) of four replications was applied. Measured growth parameters of root, shoot and leaf fresh & dry weight as well as height were found out to be reduced under water stress. Paclobutrazol reduced shoot and leaf fresh & dry weight but did not have any significant effect on root fresh & dry weight. This effect could be an important mechanism to assist plants to increase root to shoot ratio. The number of stomata per mm2 of leaf area was increased in water stress treatments’ but application did PBZ not have any significant effect. Although water stress caused a reduction in leaf relative water content but Paclobutrazol, in either cultivar, increased relative leaf water content. Both Paclobutrazol application and water stress increased temperature in either side of the leaves. Also, results indicated that both water stress and PBZ application increased proline content of the leaves.