In the background of improving Water Productivity, there is concern in deficit irrigation, which delivers a means of decreasing water depletion while reducing opposing effects on yield. A field experiment was conducted at Haramaya, Ethiopia during 2020 off-season. The objective was determining effects of irrigation levels and mulch types on yield and Water Productivity of Onion. The experimental design was a split plot in RCBD with three replications. The deficit irrigation levels 100%, 85%, 70% and 55% ETc used with the three mulch types no mulch, straw and white plastic mulch were used. The results revealed that the maximum yield of 38.43 ton ha-1 was recorded from 100% ETc with plastic mulch; whereas the minimum yield of 16.36 ton ha-1 was recorded from 55% ETc with no mulch. Higher Crop Water Productivity of about 9.04 kg ha-1mm-1 was obtained from 85% ETc with plastic mulch. With 85% ETc and plastic mulch the water saved, yield reduction and Crop Water Productivity were 113.13 mm, 9.57% and 9.04 kg ha-1 mm-1 respectively. In view of water saved and maximum yield, irrigation water application at 85% irrigation application levels and plastic mulch could be concerned. The current study recommends that, in water limited area, farming community can accept deficit irrigation level with 85% ETc under plastic mulch.