Sarpagandha is a well‐known ayurvedic herb valued for its therapeutic properties. Effective irrigation and nitrogen management are crucial for its sustainable cultivation. To investigate the optimal irrigation and nitrogen requirements and economic advantages, a field study was conducted over two consecutive growing seasons (2017–2019 and 2019–2021). This study employed a split‐plot design, evaluating 12 treatment combinations, including three levels of irrigation (irrigation water to cumulative pan evaporation ratios [IW/CPE] of 0.6, 0.9 and 1.2) and four nitrogen management strategies (100% of the recommended dose of nitrogen [RDN] applied as vermicompost, 50–50 and 25–75 split between vermicompost and fertilizer, and 100% RDN applied as fertilizer). The results revealed that the highest root yield (1437 kg ha−1); nitrogen, phosphorus and potassium uptake (134, 44.78 and 142 kg ha−1, respectively); fresh and dry weights (67 and 28 g, respectively); total alkaloid content (2%); and economic returns, including a benefit to cost ratio (BCR) of 2.95, were achieved with irrigation at an IW/CPE of 0.9 combined with 100% RDN from vermicompost. However, when vermicompost was limited, IW/CPE 0.9 with either a 50–50 or 25–75 split of RDN between vermicompost and fertilizer emerged as a viable alternative with a BCR of 2.62 and 2.58, respectively. These findings offer valuable insights for optimizing sarpagandha yield and economic performance under conditions of limited input resources.