<p>Drought is a major abiotic stress that threatens agricultural output worldwide. Though plants respond to drought stress by increasing antioxidant potential, such increases are often insufficient to mitigate drought damage. Melatonin (<i>N</i>-acetyl-5-methoxytryptamine) is a potent natural antioxidant that alleviates drought stress; however, its effects on chili under drought remain largely unknown. The current study examined the effects of exogenous melatonin on chili pepper under varying drought conditions (70%, 50%, and 30% of field capacity [FC]). Results showed that melatonin treatment under varying levels of drought stress significantly improved plant height, leaf number, leaf relative water content, leaf dry matter, chlorophyll content, carotenoid content, linear electron flow, and photosystem II (PSII) photochemical efficiency compared to drought conditions alone. Additionally, melatonin application enhanced the activity of enzymatic antioxidants and the content of secondary metabolites under drought stress compared to drought stress alone. Meanwhile, melatonin-treated plants exhibited reduced non-photochemical quenching, leaf cellular damage, and oxidative damage, as manifested by lipid peroxidation (as indicated by malondialdehyde) compared to drought-stressed plants alone. Notably, melatonin was most effective under moderate drought (50% FC) exhibiting greater mitigation in growth, physiological and biochemical parameters than under severe drought (30% FC). These findings suggest that melatonin plays a protective role in mitigating drought-induced oxidative stress by neutralizing excessive reactive oxygen species and enhancing the activity of antioxidant enzymes.</p>