Soil, available water and nitrogen are limiting factors that restrict the production of wheat in arid lands of Iran. To evaluate the effects of nitrogen on yield and drought tolerance of rainfed wheat by stress susceptibility indices, a two-year field experiment was conducted under two irrigation conditions. Treatments consist of three nitrogen timing, as main plots including total nitrogen in fall, 2/3 in the fall+1/3 in the spring, and 1/2 in the fall+1/2 in the spring. The five nitrogen rates with 0, 30, 60, 90, and 120 kg.ha−1 of urea were applied as sub-plots. The experiments were conducted using randomized complete block designs in a split-plot arrangement with three replications during the 2012–2013 and 2013–2014 cropping seasons. The results showed that yield in stress and non-stress conditions were significantly and positively correlated with most of the drought stress indices (P < 0.01) and negatively correlated with the Stress Susceptibility Index, SSI, (P < 0.05). The Tolerance Index (STI) was the best index for drought tolerance. Results of nitrogen treatment showed that nitrogen increased drought tolerance, while applying 60 kg.ha−1 nitrogen in the fall was with the highest yield in wheat.