Sorghum is grown in many parts of the semi-arid tropics in environments where water limitation is common. Recent studies have identified genetic variation in transpiration efficiency (TE) in sorghum under well-watered conditions. Crop simulation studies suggest that improvement in TE in sorghum could have considerable payoff in many water-limited environments. The objectives of this study were to examine the variation in TE for a range of sorghum genotypes grown under well watered and water limited conditions, and to seek selection indices for this trait by measuring a range of associated physiological and morphological attributes. A glasshouse study was conducted with 17 genotypes grown under well-watered (WW) or waterlimited (WL) conditions. Plants were grown in mini-lysimeters and water use and biomass production were measured. A range of other attributes were measured at plant and leaf level. Genotypes varied significantly in TE (highest about 50% greater than lowest) and TE was about 10% greater under WL. There was no interaction among genotype and water treatments. TE correlated well with transpiration per unit leaf area, which is a plant scale index of conductance. Leaf level measurements supported the association of TE with conductance. The best indicators of variation in TE were leaf C concentration and leaf ash, which offer promise as an avenue for development of a selection index. The mechanism underlying this association, however, remains unclear. Before TE can be used actively in a breeding program, field studies are required to confirm these findings from glasshouse studies and more robust selection indices are needed.