Drought is the one of the most important abiotic stresses affecting plant growth and development. The use of mulches might be one way to decrease water consumption and crop losses during droughts. This experiment was done in two parts, to study the effect of water stress and the use of the mulches on two olive cultivars 'Konservalia' and 'manzanila'. The first experiment was done in pots without plants to compare the different mulches. The second experiment was set up according to a complete randomized design with 4 replications and tests in two olive cultivars. The changeable factors include mulch type (gravel mulch, pistachio shell mulch, wheat straw mulch, de-oiled olive pomace mulch, super absorbent polymer and organic based emulsion polymer) and irrigation level (100 or 50 % field capacity). The results show that mulching decreased surface evaporation rate, improved soil water content and kept the soil underneath moist longer than bare soil. de-oiled olive pomace mulch and pistachio shell mulch seem more favorable for conserving soil water. The result of experiment 2 indicated that relative water content decrease significantly in drought – stressed plants and using pistachio shell mulch improved relative water content. Using different mulches improved chlorophyll concentration in leaves in the stressed treatment. The stomatal size obviously decreased with water deficit in 'manzanila'. An increase in stomatal dimension was found with de-oiled olive pomace mulch. In cultivar ' Konservalia', stomatal conductance increased under water stress treatment with de-oiled olive pomace and pistachio shell mulching compared with the control treatments. Both de- oiled olive pomace mulch and pistachio shell mulch improved photosynthetic rate under the stressed treatments. Water stress treatment increased the content of hydrogen peroxide and application of pistachio shell mulch significantly decreased its content in leaves. The catalase and guaiacol peroxidase activity was reduced when applying de-oiled olive pomace or pistachio shell mulch in the reduced irrigation treatments. Therefore it may be concluded that under limited irrigation conditions, de-oiled olive pomace and pistachio shell mulching will be beneficial for olive trees. Keywords : Irrigation, Mulch, Drought stress, Olive