Global climate change is having a significant effect on agriculture by causing greater precipitation variability and an increased risk of drought. To mitigate these effects, it is important to identify specific traits, adaptations, and germplasm that improve tolerance to soil water deficit. Local varieties, known as landraces, have undergone generations of farmer-mediated selection and can serve as sources of variation, specifically for tolerance to abiotic stress. Landraces can possess local adaptations, where accessions adapted to a particular environment will outperform others grown under the same conditions. We explore adaptations to water deficit in chile pepper landraces from across an environmental gradient in Mexico, a center of crop domestication and diversity, as well in improved varieties bred for the US. In the present study, we evaluated 25 US and Mexico accessions in a greenhouse experiment under well-watered and water deficit conditions and measured morphological, physiological, and agronomic traits. Accession and irrigation regime influenced plant biomass and height, while branching, CO2 assimilation, and fruit weight were all influenced by an interaction between accession and irrigation. A priori group contrasts revealed possible adaptations to water deficit for branching, CO2 assimilation, and plant height associated with geographic origin, domestication level, and pepper species. Additionally, within the Mexican landraces, the number of primary branches had a strong relationship with precipitation from the environment of origin. This work provides insight into chile pepper response to water deficit and adaptation to drought and identifies possibly tolerant germplasm.