Context Elevated atmospheric CO2 (e[CO2]) and nitrogen (N) fertilisation stimulate biomass and yield of crops. However, their interactions depend on crop growth stages and may affect water use dynamics. Aims and methods This study investigated the interactive effects of two N rates, 0 and 100 kg N ha−1, and two CO2 concentrations, ambient (a[CO2], ~400 μmol mol−1) and e[CO2] (~550 μmol mol−1), on biomass, yield and water use of two wheat cultivars, Wyalkatchem (N-use efficient) and Yitpi (local), using a free air CO2 enrichment facility. Key results Elevated [CO2] stimulated leaf area (10%, P = 0.003) and aboveground biomass (11%, P = 0.03). In addition, e[CO2] reduced stomatal conductance (25%, P < 0.001) and increased net assimilation rates (12%, P < 0.001), resulting in greater (40%, P < 0.001) intrinsic water use efficiency. During early growth stages, e[CO2] resulted in higher water use than a[CO2]; however, this difference disappeared later in the season, resulting in similar cumulative water use under both CO2 concentrations. Supplemental N stimulated grain yield of Yitpi by 14% while decreasing that of Wyalkatchem by 7% (N × cultivar, P = 0.063). With supplemental N, Yitpi maintained greater post-anthesis leaf N, chlorophyll content, canopy cover and net assimilation rate than Wyalkatchem. Conclusions During early growth stages, the e[CO2]-induced stimulation of leaf-level water use efficiency was offset by greater biomass, resulting in higher water use. By the end of the season, similar cumulative water use under both CO2 concentrations indicates the dominating effect of the prevailing seasonal conditions in the study area. Observed yield responses of the studied cultivars to supplemental N were associated with their ability to maintain post-anthesis photosynthetic capabilities. Implications Our findings suggest that N-use efficiency traits and responsiveness need to be considered independently to optimise benefits from the ‘CO2 fertilisation effect’ through breeding.