Genotype-environment interactions (GEI) limit genetic gain for complex traits such as tolerance to drought. Characterization of the crop environment is an important step in understanding GEI. A modelling approach is proposed here to characterize broadly (large geographic area, long-term period) and locally (field experiment) drought-related environmental stresses, which enables breeders to analyse their experimental trials with regard to the broad population of environments that they target. Water-deficit patterns experienced by wheat crops were determined for drought-prone north-eastern Australia, using the APSIM crop model to account for the interactions of crops with their environment (e.g. feedback of plant growth on water depletion). Simulations based on more than 100 years of historical climate data were conducted for representative locations, soils, and management systems, for a check cultivar, Hartog. The three main environment types identified differed in their patterns of simulated water stress around flowering and during grain-filling. Over the entire region, the terminal drought-stress pattern was most common (50% of production environments) followed by a flowering stress (24%), although the frequencies of occurrence of the three types varied greatly across regions, years, and management. This environment classification was applied to 16 trials relevant to late stages testing of a breeding programme. The incorporation of the independently-determined environment types in a statistical analysis assisted interpretation of the GEI for yield among the 18 representative genotypes by reducing the relative effect of GEI compared with genotypic variance, and helped to identify opportunities to improve breeding and germplasm-testing strategies for this region.