Grain sorghum is a major dry land crop of the sub-humid and the semi-arid tropics where there is drought stress and low availability of soil nitrogen. In the current study, the effects of water deficit and nitrogen levels were studied on relative water content, cell membrane stability and chlorophyll fluorescence of grain sorghum in the greenhouse condition at Ferdowsi University of Mashhad, in 2011. Treatments were two irrigation regimes (I-1 and I-2, consisting 100 and 40% of field capacity, respectively), four nitrogen levels (N-1, N-2, N-3 and N-4 consisting 0, 30, 60 and 90 mg N/kg soil, respectively) and two cultivars (Sepideh and M5) arranged in randomized complete block design with three replications. The results showed that water stress significantly decreased relative water content from 83.69 to 73.59% and also decreased cell membrane stability from 87.38 to 85.35. But, nitrogen application had no significant effect on RWC and MSI. There were no significant differences between two cultivars in the same treatment for RWC and MSI. The results showed that the kinetic parameters of chlorophyll fluorescence were sensitive to water stress and nitrogen application. The basic fluorescence (F-0) of leaves was higher in the dry treatment compared to control. The maximal fluorescence (F-m), the variable fluorescence (F-v) and the photochemical efficiency (F-v/F-m) of photosystem II (PS2) were significantly lower in the dry treatment. It was implied that PS II reaction centers were disturbed by water stress. N application increased F-m F-v, and F-v/F-m in well-watered plants suggesting that fertilizer improved photosynthesis in well watered plants. There were no significant differences between two cultivars for chlorophyll fluorescence parameters. Our results also demonstrated that chlorophyll fluorescence analysis could be used as a useful physiological tool to assess changes in photosynthetic performance of sorghum in response to water stress and nitrogen application.