The spread of modern rice varieties in different water regimes and the factors affecting adoption of modern varieties have been studied using information collected from farmers in the rainfed coastal Orissa. The coverage of modern varieties has been found to be only 37 per cent in mediumland plots and 11 per cent in lowland plots. A multivariable probit model has been used to study the factors affecting adoption of modern varieties. The important factors influencing adoption of a modern variety have been found as hydrology, tenurial status and irrigation. But, the most important factor emerged from the present study is ‘hydrology’. Therefore, a wider spread of modern rice varieties in these areas depends on the development of new varieties that are specifically adapted to these environments. The study has suggested that development of new varieties and irrigation along with adoption of land reform measures will facilitate a faster spread of modern rice varieties in the rainfed coastal Orissa.