The discrimination, Δ, against 13C in carbon accumulation by different genotypes of peanut was investigated by looking at changes in composition of isotopes of CO2 during CO2 assimilation and at the 13C/12C ratio in dry matter. The short term (minutes) discrimination, which was measured as CO2 passed over leaves in a gas exchange cuvette, was positively related to pi/pa, the ratio of the pressure of CO2 inside the leaves to the pressure of CO2 around the leaves, which is independently related to transpiration efficiency, W. Heritability of Δ was studied in plants grown in pots and in the field. Crosses were made of cultivars with contrasting Δ and W. For these genotypes, small Δ (and large W) seemed to be dominant in the F1 progeny. Severe drought stress slightly decreased Δ and W in F2 plants but, for parental genotypes in another experiment, Δ decreased but W increased when they were less severely stressed. A strong negative phenotypic correlation (r = -0.78) was found between W (g DM/ kg water used) and Δ in the leaves of well-watered potted plants of F2 progeny from a cross between two cultivars with contrasting W and Δ. Transpiration efficiency varied significantly among cultivars of peanut irrespective of whether plants were drought-stressed or well-watered. Transpiration efficiency in the potted F2 plants had a heritability of 34% while Δ had a heritability of 53%. The broad sense heritability of Δ in fieid-grown cultivars was 81% and there was no significant genotype × environment interaction for Δ. The high heritability of Δ and its strong genetic correlation with W indicates that Δ is a suitable selection criterion for W in peanut breeding programs.