In the semi-arid areas of Aragón (NE Spain), dryland crop production is limited by low and variable precipitation. Conservation tillage has been proposed as a promising strategy to improve soil and water conservation in these areas. A long-term field research project to determine the feasibility of conservation tillage was initiated in 1989 at four locations, three on loam to silt loam soils (Xerollic Calciorthid) and one on a silty clay loam (Fluventic Ustochrept), receiving between 300 and 600 mm of average annual rainfall. This study compared, under both continuous cropping and cereal-fallow rotation, the effects of conventional tillage (mouldboard plough) and two conservation tillage systems, reduced tillage (chisel plough) and no-tillage, on winter barley ( Hordeum vulgare L.) growth and yield, and water use efficiency during the first two growing seasons. Whereas a similar crop response between the conventional and reduced tillage treatments was generally found at all locations, poor performance with no-tillage was observed at the most arid sites. At these sites, lower early growth of barley with no-tillage resulted in a 53% reduction in grain yield, compared to conventional tillage. This unfavourable crop response to no-tillage was due to a lower crop water use, mainly starting with the stem elongation stage (20% lower than the tilled treatments), and a larger proportion of total water use lost as evaporation (69% compared to 50% of tilled treatments). Values of water use efficiency for grain production (0.7–17.0 kg ha −1 mm −1) and transpiration efficiency (7.4–23.8 kg ha −1 mm −1) were within the ranges reported for cereal crops in Mediterranean environments. Fallowing in the cereal-fallow rotation proved to be an inefficient practice for improving soil water storage and subsequent crop yield, under both conventional and conservation management. Based on the study, we conclude that, up to now, only reduced tillage provides an alternative to conventional tillage to maintain crop production in the dryland cereal-growing areas of Aragón.