Persian or common walnut (Juglans regia L.) is a fruit tree of significant agricultural importance and is considered highly drought-resistant. However, the effects of different irrigation treatments and tree height on the physiology, growth and fruit quality of the walnut tree remain largely elusive. In the presently study, we selected ‘Wen 185’, one of the main walnut cultivars, as the target plant species. We established three irrigation treatments (deficit (DI), conventional (CI) and excess irrigation (EI)) from April to September of 2020 and measured leaf hydraulic traits, photosynthetic characteristics, soluble sugar (SS) content, leaf area, branch growth, fruit morphology and the no and deflated kernel (NDK) rate of walnut trees in each treatment. Our results showed that: (1) midday leaf water potential (Ψmd) decreased significantly under the DI treatment and declined significantly with increasing tree height; upper canopy Ψmd in the DI group decreased by 18.40% compared to the lower canopy; (2) the light compensation point, light saturation point, maximum net photosynthetic rate, maximum photochemical efficiency and chlorophyll SPAD values of trees in the DI group decreased slightly but did not differ significantly from the CI and EI treatments; (3) reduced irrigation did not significantly affect the soluble sugar content of leaves (LSs) and fine roots (RSs), but the soluble sugar content of walnut kernels (FSs) was significantly higher in the DI treatment than under the CI and EI treatments and also increased with tree height; the average soluble sugar content across heights was 6.61% in the EI group, 7.19% in the CI group and 9.52% in the DI group; (4) branch terminal leaf area (LA) was significantly reduced at the end of new branches, and Huber values (HV) were significantly higher under the DI treatment; compared to the EI group, LA was reduced by 52.30% in the DI group and 32.50% in the CI group; HV increased by 79.00% in the DI group and 15.70% in the CI group; (5) reduced irrigation did not significantly affect fruit morphology but did increase the NDK rate of walnuts, which also increased with tree height; the average NDK rate across all heights was 4.63% in the EI group, 5.04% in the CI group, and 8.70% in the DI group; the NDK rate was 41.75% higher in the upper part of the canopy compared to the lower part in the DI group. Our results indicate that walnut trees suffer greater water stress in the upper canopy than in the middle and low parts of the canopy. By increasing HV, walnut trees maintained relatively stable photosynthetic capacity under drought. However, water deficit had a significant effect on NDK rates, particularly at greater tree heights.