Mulched drip irrigation (MDI), a water-saving technology integrating surface plastic film mulching and drip irrigation, is widely adopted in cotton production to boost yield. However, its impacts on cotton root water uptake patterns, leaf photosynthetic physiology, water productivity (WP), and the relative contributions of agronomic (irrigation amount adjustment) and engineering (irrigation method improvement) water savings remain unclear. This study tested the hypothesis that MDI improves cotton WP by stabilizing shallow soil water supply to enhance leaf photosynthesis, and quantified the weights of these two water-saving types. A two-year field experiment in Xinjiang, China compared mulched drip irrigation (MDI) and traditional flood irrigation (TFI) at two irrigation volumes (390 and 600 mm). Key variables measured included 0-100 cm soil water content (SWC), leaf relative water content (RWC), chlorophyll content, photosynthetic rate (Pn), biomass, yield, and WP (defined as seed cotton yield per unit total water use); the entropy weight method quantified water-saving weights. Compared to TFI, MDI maintained stable 0-40 cm SWC and increased 0-60 cm SWC by 4.80-12.87 % during critical flowering-boll stages. This stability enhanced leaf RWC stability and chlorophyll content (11.43-26.38 % higher at prophase full boll stage), increasing average Pn by 5.95-12.04 %. DI-3 achieved the highest WP (13.35-14.10 kg ha-1 mm-1) by reducing total water use by 8.14-15.46 % (vs. FI-3) while maximizing yield. DI-6 increased total water use by 28.58-29.76 % vs. DI-3, with excess water causing excessive vegetative growth and reduced WP. The achieved high water productivity depended on reducing the irrigation volume (contributing 57.44 % of the water saving), but was critically enabled by shifting to mulched drip irrigation (contributing 42.56 %), which efficiently transformed the saved water into enhanced yield. In conclusion, MDI at 390 mm improves cotton WP via stable shallow soil water and enhanced leaf physiology and photosynthesis. This study demonstrates that in arid regions, maximizing water productivity requires first optimizing the irrigation amount, and then adopting efficient irrigation methods to fully realize this potential.