Soil water deficit is a major limitation to agricultural productivity in arid regions. Leaf photosynthesis can quickly recover after rewatering and remain at a higher level for a longer period, thus increasing crop yield and water-use efficiency (WUE). We tested our hypothesis that leaf photosynthesis and root activity of water stressed cotton (Gossypium hirsutum L.) plants could quickly recover after rewatering at a certain growth stage and it should not influence a cotton yield but increase WUE. Treatments in this study included two degrees of water stress [V 1 (mild water stress) and V 2 (moderate water stress)] imposed at one of four cotton growth stages [S 1 (full budding to early flowering stage), S 2 (early flowering to full flowering), S 3 (full flowering to full bolling), and S 4 (full bolling to boll opening)]. The soil water content before and after the water stress was the same as that in the control treatment (CK, 70-75% of field capacity). The results indicated that water deficit significantly reduced leaf water potential, net photosynthetic rate and stomatal conductance of cotton. The extent of the decline was greater in S 2 V 2 treatment compared to others. Water deficit also reduced root activity, but the extent of inhibition varied in dependence on soil depth and duration. When plants were subjected to S 1 V 1 , root activity in the 20-100 cm depth recovered rapidly and even exceeded the CK one day after rewatering. An overcompensation response was observed for both photosynthesis and above ground dry mass within one to three days after rewatering. Compared with the CK, S 1 V 1 showed no significant effect on the yield but increased total water-use efficiency and irrigation water-use efficiency. These results suggest that even a short-term water stress during the full squaring to flowering stages and full bolling to boll opening stages mitigates, with respect to root activity, the negative effect of drought and enhances leaf photosynthesis compensatory effects of rewatering in order to increase cotton WUE with drip irrigation under mulch in arid areas.