The soil water and nitrogen (N) levels are the important factors affecting turfgrass growth. However, the impact of the water–N interaction on tall fescue (Festuca arundinacea Schreb) in terms of the N metabolism and plant morphology remains uncertain. Therefore, the objective of this study was to investigate the impacts of different N and water levels on the physiological and morphological responses of tall fescue. The experiment was designed with N (N0, N2, and N4 representing N application rates of 0, 2, and 4 g m–2, respectively) and irrigation [W1, W2, W3, W4, and W5 representing field water capacities (FWCs) of 90~100%, 75~85%, 60~70%, 45~55%, and 30~40%, respectively] treatments, and the relevant indexes of the soil water content and soil NH4+–N and NO3−–N levels as well as the physiology and morphology of the tall fescue were determined. The results demonstrated significant changes in the contents of soil water (SWC) and N and the physiological and morphological indexes, except for the enzymes related to N metabolism, including nitrite reductase (NiR), glutamate dehydrogenase (GDH), and glutamate synthetase (GOGAT). The water stress significantly enhanced the water and N use efficiencies (WUE and NUE), except the NUE in the W5 treatment. The N stress significantly influenced the SWC, soil NO3−–N content, and physiological and morphological indexes, excluding malondialdehyde, NiR, GOGAT, and above- (AGB) and below-ground biomass, resulting in the increased WUE and NUE. The application of a low N rate effectively alleviated the detrimental impacts of water stress on the SWC and glutamine synthetase activity. In conclusion, W2 and N2 are deemed more appropriate treatments for the low-maintenance measures of tall fescue turf. Among all the treatments, N2W2 is recommended as the optimal water–N interaction treatment due to its ability to conserve resources while still ensuring high turf quality.