Development of a standard evaluation protocol has been a pressing problem for the selection of drought-resistant genotypes of tall fescue (Festuca arundinacea). This study was conducted to evaluate the association of forage yield with specific phenological and morphological traits to find a proper model for indirect selection under irrigated (normal) and drought-stress conditions in tall fescue. A random sample of seventy-five genotypes were clonally propagated and evaluated in normal and drought-stress environments in the field during 2009 and 2010. Results showed that water stress had a negative effect on forage yield and most of the morphological traits measured and reduced genotypic variation for most of them. Forage yield had the highest genotypic variation, whereas days to pollination had the lowest variation. Low broad-sense heritability estimates were obtained for dry-matter yield, but heritability for the traits of number of stems per plant, plant height and crown diameter was moderately high. These traits were identified as the main components of forage yield. The importance of these components and their direct and indirect effects on forage yield was different in normal and drought-stress conditions. This suggests that indirect selection for developing high-yielding, drought-tolerant varieties should be performed under drought-stress conditions with a specific model.