Determining allowable soil moisture depletion level is critical for determining proper irrigation scheduling. The study was conducted at Wondo Genet Agricultural Research Center, Ethiopia, latitude 8°25'59'', longitude 39°01'44''and altitude of 1800 m.a.s.l to determine optimal soil moisture depletion level for sweet basil (Ocimum basilicum L.). Six levels of soil moisture depletion (20, 30, 40, 50, 60 and 100% of total available water (TAW) of the soil), with three replication were used as treatments to evaluate the yield and yield component of sweet basil in randomized complete block design. Different levels of soil moisture depletion levels significantly affected all recorded yield and yield components of sweet basil including its water productivity. Significantly higher yield and yield components were associated with frequently irrigated treatment under lower soil moisture depletion levels before irrigation. However, when sweet basil was irrigated beyond 40% TAW lowest yield and yield components were recorded. Therefore, sweet basil could be irrigated when the soil moisture content is depleted by 40% of the total available water content in the soil to enhance yield and water use efficiency in the study area and similar agro ecologies.