India has the largest area under onion (Allium cepa) crop but its average productivity (14.21 t ha-1) is considerably lower than the world’s average of 19.4 t ha-1. Besides low productivity, irrigation efficiencies are also very low i.e.30-35% in India. Managing onion crop with less than adequate irrigation water availability is a challenge in several parts of the country. Options of i) deficit irrigation (DI) i.e.20% or 40% less water application at one of the growth stages of the crop and ii) controlled deficit of 20% or 40% on all growth stages i.e. regulated deficit irrigation (RDI) were explored for maximizing IWUE of onion under deficit water application through subsurface drip irrigation. A field experiment was conducted on onion (var. Agrifound light red) for three years from October to May in 2007-08, 2008-09 and 2009-10 to study the effect of DI and RDI on onion yield and its quality under subsurface drip irrigation. In DI treatments, the crop was provided the irrigation with 60% and 80% of ETc creating water stress of 40 and 20%, respectively at developmental (2nd), bulb formation (3rd) and bulb maturity (4th) crop growth stages. In case of RDI treatments, 20% and 40% water stress was created throughout the crop season by applying the irrigation water at 80% and 60% ETc. The maximum yield (44.7 t ha-1) was obtained in the full-irrigation treatment (T1). In RDI, 20 and 40% deficit water application saved 19.2 and 41.7% water and resulted in 20 and 32% reduction in yield, respectively. In DI, 20% water deficit in the growth stages of 2nd, 3rd and 4th saved 2.1, 13.2 and 4.6% of water with 19.8, 18.3 and 11.2% reduction in yield, respectively in comparison to full irrigation water application. This suggests that RDI is better option of water saving than DI. Saving of water through RDI may be used to irrigate additional cropped area. Strategy suggested for productions of onion crop can be adopted in large scale to offset high cost of onion, which is cause of concern for all stake holders.