Yield of eight wheat cultivars was evaluated under rainfed and irrigated conditions in a Mediterranean environment. Variation in grain yield resulted from variation in both aboveground biomass production and in harvest index. Under rainfed compared to irrigated conditions, grain yield, biomass and days to heading were decreased, whereas harvest index was increased. Grain yield of the different cultivars under rainfed conditions correlated with that under irrigated conditions in one of the two years. Among cultivars, harvest index under rainfed and irrigated conditions were correlated in both years. Water was used more efficiently for biomass production, and equally efficiently for grain production, under irrigated compared to rainfed conditions. Under rainfed conditions, crop water use efficiency was higher for cultivars developed for rainfed environments than for those developed for high-rainfall or irrigated environments. Cultivars with low-rainfall target environments had the lowest evapotranspiration under rainfed conditions. Under rainfed conditions, differences between the cultivar groups in crop water use efficiency corresponded with trends in water use efficiency of individual plants and with the ratio of photosynthesis to transpiration, measured on plants grown in a growth room. Early in the season, water was used more efficiently for biomass production at high sowing densities than at low sowing densities. Through faster biomass production and ground cover a smaller proportion of the evapotranspired water was lost in soil evaporation and a larger proportion was transpired. However, the net effect was a greater water use in the early phases of growth and consequently a lower water availability later in the season, leading to similar yields regardless of sowing density.