Increased water scarcity necessitates the implementation of water-conserving irrigation management practices tosustain crop production, especially in water-limited areas. A two-year field study was conducted during 2020 and 2021 to evaluate the effect of deficit irrigation on potato yield and water use efficiency. The experiment was conducted in randomized complete block design with four irrigation levels (100% ETc (crop evapotranspiration), 85% ETc, 70% ETc, and 55%ETc). The results showed that, deficit irrigation level have a significant difference in number of tuber per plant, marketable, total yield and water use efficiency. Potato yield significantly reduced with deficit irrigation level. Next to full irrigation the maximum yield was obtained under 85% ETc and 70%ETc with better crop and irrigation water use efficiency. Maximum crop and irrigation water use efficiency was obtained under 55% ETc. The partial budget analysis showed that the maximum acceptable MRR was obtained from 70%ETc and the highest net benefit was obtained under full irrigation. Therefore, in area where sufficient amount of water is available full irrigation is recommended to obtain maximum yield, but in water scarce area applying 85%ETcand 70%ETc is recommended with 17.5% and 23.2% yield reduction respectively with acceptable economical benefit.