Thirty nine genotypes of cotton (Gossypium hirsutum L.) were subjected to multivariate analysis to identify various contributing characters to genetic divergence. The genotypes were grouped into seven clusters based on the individual D2 values of the characters viz., days to 50% flowering, specific leaf area, specific leaf weight, relative water content, chlorophyll stability index, plant height, number of sympodia per plant, number of bolls per plant, boll weight and seed cotton yield. Cluster I had the highest number of genotypes followed by Cluster III. The inter cluster distance ranged from 10.35 between clusters V and VIII to 18.43 between cluster III and IV. The genotypes included in cluster III and IV were characterized by parameters contributing to drought tolerance viz., high specific leaf weight, relative water content, chlorophyll stability index and low specific area. The genetically diverse parents were likely to produce not only high heterotic effects but also desirable seggregants. Useful recombinants in the segregating populations could be obtained by making crosses between genotypes of clusters III (CNH 120MB, ADB 320, CCP 2, CCP 5, LPS 1, 89815, L 723, L 724 and L 738) and VI (NA 1588 and NA 1678) as the distance was maximum keeping in view the drought tolerance.