Using plant genotypes adaptable to water-deficit stress is an optimal strategy in sustainable agriculture. This study was conducted to assess the selection criteria for identifying high yielding drought-tolerant F₂-derived F₃ flax families from a cross between Iranian genotype KO37 and the Canadian genotype SP1066. One hundred and nineteen F_2:3 lines were evaluated under drought stress and non-stress conditions using an 11 × 11 lattice design with three replications. Sixteen drought tolerance indices adjusted based on grain yield under drought stress and non-stress conditions were calculated. The presence of high variability for grain yield and irrigation water use efficiency in parental lines and F_2:3 families under both conditions indicated that the F_2:3 population or its advanced generations can be used in selection programs to increase drought tolerance and also to identify quantitative trait loci and genes related to grain yield and drought tolerance in flax. The results of biplots based on the PC₁ and PC₂ and triplot analysis based on the stress tolerance index and grain yield in both stress and non-stress conditions introduced 13 families as the most promising families for drought tolerance, and therefore, their advanced generations can be used in future breeding programs to improve drought tolerance in flax.