Ecophysiological studies in Eucalyptus have shown that water is the principal factor limiting stem growth. Effect of water deficit conditions on physiological and biochemical parameters has been extensively reported in Eucalyptus. The present study was conducted to identify major polyethylene glycol induced water stress responsive transcripts in Eucalyptus grandis using gene co-expression network. A customized array representing 3359 water stress responsive genes was designed to document their expression in leaves of E. grandis cuttings subjected to -0.225MPa of PEG treatment. The differentially expressed transcripts were documented and significantly co-expressed transcripts were used for construction of network. The co-expression network was constructed with 915 nodes and 3454 edges with degree ranging from 2 to 45. Ninety four GO categories and 117 functional pathways were identified in the network. MCODE analysis generated 27 modules and module 6 with 479 nodes and 1005 edges was identified as the biologically relevant network. The major water responsive transcripts represented in the module included dehydrin, osmotin, LEA protein, expansin, arabinogalactans, heat shock proteins, major facilitator proteins, ARM repeat proteins, raffinose synthase, tonoplast intrinsic protein and transcription factors like DREB2A, ARF9, AGL24, UNE12, WLIM1 and MYB66, MYB70, MYB 55, MYB 16 and MYB 103. The coordinated analysis of gene expression patterns and coexpression networks developed in this study identified an array of transcripts that may regulate PEG induced water stress responses in E. grandis.