The use of saline water under drought conditions is critical for sustainable agricultural development in arid regions. Biochar is used as a soil amendment to enhance soil properties such as water-holding capacity and the source of nutrition elements of plants. Thus, the research was carried out to assess the impact of biochar treatment on the morphological and physiological characteristics and production of Solanum lycopersicum in greenhouses exposed to drought and saline stresses. The study was structured as a three-factorial in split-split-plot design. There were 16 treatments across three variables: (i) water quality, with freshwater and saline water, with electrical conductivities of 0.9 and 2.4 dS m− 1, respectively; (ii) irrigation level, with 40%, 60%, 80%, and 100% of total evapotranspiration (ETC); (iii) and biochar application, with the addition of biochar at a 3% dosage by (w/w) (BC3%), and a control (BC0%). The findings demonstrated that salt and water deficiency hurt physiological, morphological, and yield characteristics. Conversely, the biochar addition enhanced all characteristics. Growth-related parameters, such as plant height, stem diameter, leaf area, and dry and wet weight, and leaf gas exchange attributes, such rate of transpiration and photosynthesis, conductivity, as well as leaf relative water content were decreased by drought and salt stresses, especially when the irrigation was 60% ETc or 40% ETc. The biochar addition resulted in a substantial enhancement in vegetative growth-related parameters, physiological characteristics, efficiency of water use, yield, as well as reduced proline levels. Tomato yield enhanced by 4%, 16%, 8%, and 3% when irrigation with freshwater at different levels of water deficit (100% ETc, 80% ETc, 60% ETc, and 40% ETc) than control (BC0%). Overall, the use of biochar (3%) combined with freshwater shows the potential to enhance morpho-physiological characteristics, support the development of tomato plants, and improve yield with higher WUE in semi-arid and arid areas.