Potassium (K) is an important cation that regulates plant metabolism. Therefore the effect of different concentrations of potassium (0, 75, 150 kg ha−1 K2SO4) on photosynthesis efficiency of three winter wheat cultivars (Baran, Homa, Hashtrud) was investigated during the growing seasons of 2017–18 and 2018–19 under cold dryland conditions in Maragheh, Iran. Accumulation of potassium ion (K+) was observed to be increased with an increase in the concentration of K2SO4. With an increase in K+ the Hashtrud cultivar was observed to have more relative water content (RWC), normalized differential vegetation index (NDVI), and stomatal conductance (gs) than other cultivars. This resulted in a higher grain yield for the Hashtrud cultivar. RWC (R2 = 0.97), NDVI (R2 = 0.96), and gs (R2 = 0.92) had a positive relationship with KUE (grain yield/unit of K fertilizer used), especially in dryer years. K deficiency induced hydrogen peroxide (H2O2) and malondialdehyde (MDA) concentration in plants. The application of K increased superoxide dismutases and reduced abscisic acid, to maintain the plants' stomatal conductance. Chlorophyll a fluorescence (ChlF) and the calculation of double normalized relative variable fluorescence reveal detailed information's about the response of wheat plants to K application under dryland conditions. The application of a high concentration of K (150 kg ha−1 K2SO4) on Hashtrud plants had a beneficial effect on the ChlF efficiency at different OJIP phases (KJ and JI). We found the efficiency of ChlF at the ΔWK-I phase with the values of FV/FO and PIABS improved with the application of 150 kg ha−1 K2SO4 and can be correlated with total yield improvement. These observations indicated that the application of a high concentration of K in stressed conditions for dryland areas could improve photosynthetic efficiency and wheat plant performance.