Intensively farmed crops used to experience numerous environmental stresses.  Among these, shade and drought significantly influence the morpho-physiological and biochemical attributes of plants.  However, the interactive effect of shade and drought  on the growth and development of soybean under dense cropping systems has not been reported yet.  This study investigated the interactive effect of PEG-induced osmotic stress and shade on soybean seedlings.  The soybean cultivar viz., C-103 was subjected to PEG-induced osmotic stress from polyethylene glycol 6000 (PEG-6000) under shading and non-shading conditions.  PEG-induced osmotic stress significantly reduced the relative water contents, morphological parameters, carbohydrates and chlorophyll contents under both light environments.  A significant increase was observed in osmoprotectants, reactive oxygen species and antioxidant enzymes in soybean seedlings.  Henceforth, the findings revealed that, seedlings grown under non-shading conditions produced more malondialdehyde and hydrogen peroxide contents as compared to the shade-treated plants when subjected to PEG-induced osmotic stress.  Likewise, the shaded plants accumulated more sugars and proline than non-shaded ones under drought stress.  Moreover, it was found that non-shaded grown plants were more sensitive to PEG-induced osmotic stress than those exposed to shading conditions, which suggested that shade could boost the protective mechanisms against osmotic stress or at least would not exaggerate the adverse effects of PEG-induced osmotic stress in soybean seedlings.