Introduction Tillage and straw management practices play an important role in improving wheat production in rainfed regions. This study aimed to investigate the underlying mechanisms from the perspective of how these practices affect sugar metabolism in flag leaves and grains, as well as the yield formation process of wheat on the Loess Plateau of China.Methods This research was conducted in 2023 and 2024 based on a long-term tillage experiment initiated in 2001. The experiment included four treatments: conventional tillage (T), conventional tillage with straw incorporation (TS), no-tillage with no straw (NT), and no-tillage with straw mulching (NTS).Results Compared with the T treatment, the NTS treatment significantly increased soil water content by 8% and flag leaf water content (FWC) by 13%. Correlation and path analysis indicated that higher FWC was associated with enhanced activities of flag leaf sucrose phosphate synthase and flag leaf sucrose synthase. Concurrently, flag leaf sucrose content increased, and sucrose was efficiently transported to grains. In the grains, enhanced sucrose synthase activity was linked to increased sucrose cleavage and starch biosynthesis. Consequently, compared with the T treatment, the NTS treatment increased grain yield by 44% and water use efficiency (WUE) by 45%.Discussion This study demonstrates that NTS treatment can enhance grain yield and WUE by improving soil water status, optimizing flag leaf water status, and regulating sugar metabolism in flag leaves and grains. This highlights sugar metabolism as an important physiological link between conservation practices and improved wheat productivity in rainfed systems.