Recent studies have documented remarkable genetic variation among Arabidopsis thaliana accessions collected from diverse habitats. Of particular interest are accessions with putatively locally adapted phenotypes - that is, accessions with attributes that are likely adaptive at their sites of origin. These genotypes may provide insight into the genetic basis of adaptive evolution as well as allow the discovery of genes of ecological importance. We studied the physiology, genome content and gene expression of two physiologically extreme accessions (Tsu-1 from Tsushima, Japan and Kas-1 from Kashmir, India). Our study was conducted under two levels of soil moisture and accompanied by physiological measurements to characterize early responses to soil drying. Genomic hybridizations identified 42,503 single feature polymorphisms (SFP) between accessions, providing an initial screen for genetic differences. Transcript profiling identified a large number (5996) of genes exhibiting constitutive differences in expression including genes involved in many biological pathways. Mild soil drying resulted in only subtle physiological responses but resulted in gene expression changes in hundreds of transcripts, including 352 genes exhibiting differential responses between accessions. Our results highlight the value of genomic studies of natural accessions as well as identify a number of candidate genes underlying physiological differences between Tsu-1 and Kas-1.