Enhancing water productivity of irrigated crops through water management is a vital option inwater scarce areas, such as Mirab Belessa Woreda. The general objective of the study was to evaluate the response of onion (Allium cepa L.) yields and water productivity through field experiments at Gurnbaba irrigation scheme under different water application levels and validated by Aqua crop model. The experimental setups have six randomized treatments (Tr) with three replications. The water application levels for the crop at the field were considered 100 %, 80% and 60% application level and one levels of straw mulch (0 and 6t pea straw mulch per ha) in three replications in different growth stages. The agronomic parameters were collected (canopy cover, biomass and yield) to evaluate the crop yield response of the Aqua crop model. The output of COPWAT-8 model indicated that the highest seasonal water requirement of onion was 424.5 mm at 100% ETc while; the lowest was 254.7 mm at 60% ETc. The Aqua Crop model performed well in simulating the growth of biomass, canopy cover and yield of onion for most of the treatments (R 2 = 0.96 for yield, 0.92 for canopy cover and 0.81 for biomass. RMSE values for yield, canopy cover and biomass was 0.35 ton/ha, 3.24 ton/ha and 0.0.72 ton/ha respectively. The highest marketable bulb yield (32.47 t/ha) was obtained from an experimental plot treated with combined application of 100% of ETc and 6 t/ha straw mulch, while the lowest (20.10 t/ha) was obtained from plots treated with 60% ETc irrigation level and no mulch treatment. Water productivity was also highly significant (p<0.01) influenced by the interaction effects of deficit irrigation and straw mulching levels; the highest(9.47kg/m3 ) and the lowest (5.65 kg/m3 ) were recorded from the plots with 100% ETc and no mulch at T1. Therefore, in terms of marketable bulb yield and water profitableproductivity, irrigating with 80% ETc with 6 t/ha straw mulch would be recommended for production of onion in the study area. Key words: Aqua crop, deficit irrigation, marketable, yield onion and straw mulching