Drought and salinity are the most important limiting factors of plant growth and development in many regions of the world. Using plants that have satisfactory production under such conditions would be an appropriate strategy. To evaluate the combined effects of salinity and drought stresses on kallar grass (Leptochloa fusca L. kunth), a factorial experiment based on completely randomized design with 4 replications was conducted under controlled conditions at Research Greenhouse of Collage of Agriculture, Ferdowsi University of Mashhad during 2009. The treatments were drought stress (100, 50 and 25 percent of field capacity) and salinity stress (0, 5, 10 and 20 dSm^-1). Results showed that physiological traits as photosynthesis rate, transpiration rate, chlorophyll fluorescence yield, and SPAD were reduced significantly by increasing drought and salinity levels, so that the lowest values of these traits were observed under severe drought (25% FC) and salinity (20 dSm^-1) stresses. Moderate drought stress (50% FC) significantly increased chlorophyll fluorescence yield, whereas low to moderate salinity stresses (EC= 5-10 dSm^-1) significantly increased chlorophyll fluorescence yield and SPAD value compared to the control. Root to shoot ratio of kallar grass was significantly increased at the highest level of drought stress (25% FC), while this occurred with the moderate to high salinity stress (EC =10-20 dSm^-1). Moreover, kallar grass biomass was decreased about 69 and 42 % under severe drought and salinity stresses compared with the control, respectively. Combination of drought and salinity stresses showed a better response of this halophyte species to salinity stress than to drought stress, as the full irrigation (100% FC) with salinity of 20 dSm^-1 did not cause a statistical difference in shoot dry weight of kallar grass compared with the moderate drought stress (50% FC) up to the salinity level of 5 dSm^-1. Overall, kallar grass showed more tolerance to high levels of salinity with full irrigation than moderate irrigation; suggesting that planting of this species in lands with adequate saline and brackish water is appropriate.