Optimizing soil management practice is critical for improving crop productivity and resource use efficiency in semiarid agroecosystems. This study evaluated the effects of tillage intensity and wheat straw mulching on yield, water use efficiency (WUE), and profitability of shallot (Allium cepa var. ascalonicum Baker) in eastern Ethiopia. Field experiments were conducted during the 2021/2022 off-season at two contrasting sites (Rare and Toni) using a split-plot design with three tillage systems (conventional tillage [CT], minimum tillage 1 [MT1], and minimum tillage 2 [MT2]) assigned to main plots and four mulch rates (0, 3, 6, 9 t & centerdot;ha-1) to subplots, with three replications. The interaction between tillage and mulching significantly influenced the total bulb yield and WUE at both sites (p <= 0.05). At Rare, the highest total bulb yield (51.29 t & centerdot;ha-1) and WUE (13.16 t & centerdot;ha-1 & centerdot;mm-1) were obtained from MT1-6 (MT1 with 6 t & centerdot;ha-1 of mulching), while at Toni, MT1-9 (MT1 with 9 t ha-1 of mulching) produced the highest total yield (57.96 t & centerdot;ha-1) and WUE (13.36 t & centerdot;ha-1 & centerdot;mm-1). Yield advantages under these treatments reached up to 40%-88% compared with nonmulched minimum and CT systems. Economic analysis revealed that MT1 combined with moderate to high mulch rates generated the highest net benefits, with 672,928 ETB ha-1 at Rare (MT1-6) and 1,060,101 ETB ha-1 at Toni (MT1-9). Although MT2-0 (MT2 without mulch) showed a higher marginal rate of return (MRR%) due to lower input costs, it resulted in substantially lower yields and WUE. Overall, integrating moderate MT (MT1) with 3-6 t & centerdot;ha-1 wheat straw mulch provides an optimal balance between productivity, WUE, and economic returns. These findings highlight the potential of conservation-oriented soil management practices to enhance sustainable intensification of shallot production under semiarid conditions.