Studies were carried out to optimize the use of water and nutrients by the crop with three moisture regimes [0.9, 1.2 and 1.5 irrigation water:cumulative pan evaporation (IW:CPE) ratios]. two variables of organic mulch (control and sugarcane trash at 7 t/ha) and three levels of nitrogen (0, 100 and 200 kg/ha). Soil moisture regimes maintained at 1.2 IW:CPE ratio significantly increased the crop growth and herb and essential oil yields as compared with that of 0.9 IW:CPE ratio. The increase in herb yield due to 1.5 and 1.2 IW:CPE ratios was recorded to be 28.5% and 19% respectively, over the irrigation given at 0.9 IW:CPE ratio, with the corresponding increase in essential oil yield to the extent of 23.5%, and 15.5%. Interaction effect of moisture regimes and nitrogen rates indicated that increasing levels of irrigation at the highest level of N (200 kg/ha) improved essential oil yield of the crop. Application of N at 200 kg/ha in the mulched plots significantly enhanced the N Uptake by the crop and essential oil yield over the control and 100 kg N/ha applied in the mulched/or unmulched plots and 200 kg N/ha applied in the unmulched plots. Application of organic mulch and nitrogen at 200 kg/ha improved the water use efficiency (WUE) in menthol mint crop. Higher moisture regimes maintained up to 1.2 IW:CPE ratio increased the WUE. The quality of essential oil in terms of its major constituent, menthol, improved slightly with 1.2 IW:CPE ratio as compared to 0.9 and 1.5 IW:CPE ratios at first and second harvests of the crop. It is recommended that menthol mint crop could be grown profitably by providing 16 irrigations, that is 80 cm water (based on 12 IW:CPE ratio) and nitrogen at 200 kg/ha in the sugarcane trash mulched plots, which could give a highest benefit:cost ratio from menthol mint cropping. (c) 2005 Elsevier Ltd. All rights reserved.