Abstract To address the dearth of management of lettuce in the Indo-Gangetic plains, field experiment was conducted on a sandy loam Inceptisol for optimizing the irrigation, nitrogen requirement and economics of lettuce for three years. Four irrigation levels (conventional, I1 and irrigation at 0.6, 0.8, 1.0 irrigation water to cumulative pan evaporation (IW/CPE) ratio, as I2, I3 and I4) and three nitrogen management (100% recommended dose of N i.e., RDN as inorganic, N1; 50:50% RDN as inorganic: vermicompost, N2 and 100% RDN as vermicompost, N3) was laid out in thrice replicated split plot design. All the major physiological characteristics like plant height, number of leaves, average head diameter was improved with I4, N2 and their interaction (I4N2). Maximum average head yield (10.6 t ha−1) was obtained with I4 and I3, 10.5 t ha−1 for N2, while I4N2 yielded 11.3 t ha−1. Maximum water productivity (11.8 kg m−3) was obtained under I2N2. A strong non-linear relationship was detected between yield with irrigation water applied (). Higher soil moisture extraction (80.2%) in top 0–30 cm and lower (19.8%) for 30–45 cm depth and maximum leaf dry matter yield, nutrient concentrations and uptake was found with I4N2 and I3N2. The moderate deficit irrigation and optimum nutrient at I3N2 was found best for optimizing yield, higher water productivity, nitrogen economy and monetary returns of lettuce.