Abstract: The aim of this research was to determine the effects of timing and intensity of source reduction on grain yield of wheat under well-watered and drought stress conditions. A field experiment was conducted at the research farm of the Agriculture College, University of Tehran, Karaj, in 2003-2004. Drought stress was imposed when plants were at the second node stage by withholding watering and plants were re-irrigated when they showed signs of wilting or leaf rolling, particularly during the morning. Various intensities of leaf defoliation were performed at three growth stages: booting, anthesis and 20 days after anthesis. Flag leaf gas exchange parameters as well as chlorophyll content measurements were made 20 days after defoliation at each growth stage. Generally leaf removal appeared to stimulate an increase of net photosynthesis rate (pn) and stomatal conductance (gs) of the remaining flag leaf. With leaf removal, stability of the flag leaf chlorophyll content tended to increase. Neither grain yield, nor protein content were affected by defoliation. Interestingly, even removal of all leaves at anthesis stage did not reduce grain yield and grain protein significantly. Increased remobilization of stored photoassimilate, decreased maintenance respiration by source reduction and therefore enhanced photoassimilate partitioning toward grain and spike photosynthesis might be responsible for sustain grain growth in this condition.