Limited or no tillage with residue retention on the soil surface has had mixed success in irrigated agricultural systems. The effects of tillage and crop residue management on soil properties and crop yields were studied on a silt loam soil using a rotation of winter wheat (Triticum aestivum L.) and maize (Zea mays L.) for 2 yr, followed by cotton (Gossypium hirsutum L.) for 2 yr. Permanent beds (PB) with limited reshaping and conventional tillage (CT) were compared, each with both 25% residue retention on a mass basis (R25) and 100% residue retention (R100). There was greater soil compaction and consolidation in the 0.2‐ to 0.3‐m depth with the PB system regardless of residue retention practice. Compared with the CT system and the PB+R25 treatment combination, the PB+R100 treatment combination increased the amount of water‐stable macroaggregates, however only in the fourth year. The soil organic C in the 0‐ to 0.4‐m depth increased at 0.70 Mg ha−1 yr−1 in PB+R100 vs. 0.48 Mg ha−1 yr−1 in CT+R100. Poor early plant growth and reduced plant population in PB caused decreased water use efficiency (WUE) and irrigation water use efficiency (IWUE) of maize and cotton grown consecutively in 2006 and 2007. Generally, R100 improved IWUE and WUE, except for cotton in 2007. For PB+R100, cotton seed‐lint IWUE in 2008 increased to 0.59 kg m−3 from 0.41 earlier. Smaller maize and cotton plant populations and cooler soil temperatures at cotton emergence in PB+R100 decreased crop productivity during the first 3 yr.