We conducted a two-year study of deficit irrigation impact on peach yield and quality in semi-arid northwest China. Over two years; four-year-old peach trees were irrigated at 100, 75, 50 and 25% of peach evapotranspiration (ETs), here, ETA Coefficient (K-C)xLocal reference evapotranspiration (ETs). During the April July fruit production season we measured root zone soil water depletion, sap flow velocity, net photosynthetic rate (P-n, transpiration rate (T-r), stomatal conductance (G(s)), water use efficiency (WUE=P-n/T-r), fruit quality, and yield under a mobile rain-out shelter. Increased soil water depletion reasonably mirrored decreasing irrigation rates both years, causing progressively greater water stress. Progressive water stress lowered Gs, which in turn translated into lower T-r as measured by sap flow. However, mild deficit irrigation (75% ETC) constricted T-r more than P-n. P-n was not different between 100 and 75% ETs treatments in both years, and it decreased only 5-8% in June with higher temperature than that in May with cooler temperature. Concurrently under 75% ETs treatment, T-r was reduced, and WUE was up to 13% higher than that under 100% ETs treatment. While total fruit yield was not different under the two treatments, because 75% ETs treatment had fewer but larger fruit than 100% ET, trees, suggesting mild water stress thinned fruit load. By contrast, sharply decreased T-r and P-n of the driest treatments (50 and 25% ETC) increased WUE, but less carbon uptake impacted total fruit yield, resulting 13 and 33% lower yield compared to that of 100% ETs treatment. Irrigation rates affected fruit quality, particularly between the 100 and 75% ETs trees. Fewer but larger fruit in the mildly water stressed trees (75% ETC) resulted in more soluble solids and vitamin C, firmer fruit, and improved sugar:acid ratio and fruit color compared to the 100% ETs treatment. Overall, trees deficit irrigated at 75% ETs maintained yield while improving fruit quality and using less water.