Water scarcity is a major problem for crop production around the world including Southwestern United States and growers are increasingly using groundwater for agriculture in Southern New Mexico. Most of the groundwater in New Mexico is brackish and continuous long-term use could lead to salt accumulation in the soil. Reverse osmosis (RO) can desalinate brackish groundwater (BGW), however, environmentally safe disposal of RO concentrate is costly. This greenhouse study evaluated the effects of BGW and RO concentrate at various growth stages of two chile pepper cultivars, NuMex Joe E. Parker and NuMex Sandia Select. Five salinity treatments were applied to plants, three of them used saline waters of 0.6 (control), 4.0 (BGW), and 8.0 dS/m (RO) throughout the growing season, whereas the other two changed waters of 4.0 and 8.0 dS/m to waters of 2.0 and 6.0 dS/m from the beginning of the flowering stage. Number of flowers, days to flowering, relative plant heights, relative fresh biomass, fruit yields, photosynthetic rate (Pn), stomatal conductivity (gS), and actual evapotranspiration (ETa) significantly decreased with increasing irrigation water salinity levels. Concentrations of Mg2+, Na+, and Cl− in plants increased with increasing water salinity levels. Changing to irrigation with reduced salinity waters of 2.0 and 6.0 dS/m at the flowering stage initiated reproductive development more rapidly and alleviated the adverse influence of salinity on the number of flowers of chile pepper, plant height, Pn, as well as fresh shoot and fruit weight than that with continuous irrigation with electrical conductivity (EC) of 4.0 dS/m and 8.0 dS/m beyond the flowering stage. Irrigation that practices a change from high salinity to lower salinity at the flowering stage can optimize the use of saline irrigation water for growing chile peppers.