Improving irrigation water productivity by increasing the irrigation efficiency and using deficit irrigation management under subsurface drip irrigation is one of the most effective ways to save water and increase quality and quantity of agricultural production. The objective of this study was to evaluate the effect of deficit irrigation on yield and vegetation characteristics of mature olive trees under subsurface drip irrigation system in gravel soil to determine the optimum amount of water for olive trees in an arid area. The experimental treatments consisted of five irrigation levels (supplying 100, 80, 60, 40 and 20 percent of olive tree evapotrairation, referred to as I 1 , I 2 , I 3 , I 4 and I 5 respectively) in a randomized complete block design with three replications which was considered in 2013 and 2014. The olive tree evapotrairation (ETc) was calculated using the meteorological data, the FAO-Penman-Monteith equation and olive crop coefficient. Distribution of soil moisture and salinity were measured at various soil depths. During the growing season, the length of annual shoots, the number of annual shoot branches were measured and fruit of trees were measured at the end of the growing season. The results showed that, the soil moisture decreased with increase of distance from the drip line. Soil salinity at the soil surface (0-10 cm) was higher and in the root zone was lower for full irrigation treatment. The ET c was 528.8 mm for first year measured. The length of annual shoots and the number of annual shoot branches were affected by irrigation (P 0.01) during both years and IWUE was affected by irrigation (P 0.01) in 2013. Also there were significant differences in yield, diameter of fruits and the length of annual shoots between all irrigation levels. Averages, the amount of growth of shoots length were 0.35, 0.21, 0.2, 0.16 and 0.05 cm month -1 at I 1 , I 2 , I 3 , I 4 and I 5 treatments, respectively. The maximum of yield and fruit size were 12 kg per tree and 16.3 mm at I 1 treatment and the minimum were 5 kg per tree and 12.8 mm at I 5 treatment. The maximum of IWUE was 3.4 kg m -3 (with 5 kg olive yields per tree) in I 5 treatment and the minimum of IWUE was 1.53 kg m -3 (with 8.97 kg olive yield per tree) at I 2 treatment. Overall, the 0.4ET c level (supply 40 percent of evapotrairation) was selected as the most useful irrigation level for olive tree in the landscape with low water need and the 0.8ET c level (Supply 80 percent of evapotrairation) was recommend for economic production. Keywords: deficit irrigation, water requirement, subsurface drip irrigation, gravel, water use efficiency