AbstractDeep drip irrigation combined with high‐density planting is one of the most economical and effective ways to address residual film pollution. This study aimed to explore the photosynthetic potential of and achieve water‐saving and high‐yielding filmless cotton (Gossypium hirsutum L.) by optimizing the irrigation amount. We analyzed the effect of source leaf activity on leaf nitrogen allocation and photosynthetic nitrogen utilization efficiency (PNUE) under different irrigation amounts (mm, 375 (W5), 348 (W4), 320 (W3), 293 (W2), and 265 (W1)) in a 2‐year field experiment under this planting mode. The photosynthetic pigment content, leaf mass per area, and light compensation point all decreased with increasing amounts of irrigation, while the apparent quantum yield of photosynthesis, light saturation point, maximum carboxylation rate (Vcmax), maximum electron transport rate (Jmax), triose phosphate utilization rate (VTPU), nitrogen content in the electron transfer component (NB), and nitrogen content in the carboxylation component (NC) showed opposite trends. At the later full boll stage, the W3 and W4 treatments increased the leaf area of a whole plant (LA) by 10.4% and 19.4%, respectively, compared to that in the W1 treatment, while the PNUE increased by 20.2% and 20.8%, respectively, compared to that in the W5 treatment. In addition, principal component analysis found that the factor variables total nitrogen content in the photosynthetic apparatus (NT), net photosynthetic rate (Pn), stomatal conductance (Gs), light‐saturated net photosynthetic rate (Amax), NC, and Vcmax had higher loadings and were all positively correlated with PNUE; LA had a higher loading and was positively correlated with reproductive organ biomass. Therefore, we recommend using an irrigation rate of 320 mm in this cultivation system to increase nitrogen in carboxylation and electron transport components, enhance photosynthetic capacity, and thereby improve PNUE to increase reproductive organ biomass and reduce the irrigation amount in arid areas.