Field experiments were conducted for two years to investigate the effect of various methods of planting and irrigation water levels on yield and water use efficiency in cotton irrigated through surface drip irrigation in semi-arid region of Punjab. The treatments comprised three methods of planting under drip irrigation (lateral in each row, lateral in between pair of rows and lateral in between pair of rows but third row missing) and one check-basin method of irrigation at three levels of irrigation (0.6, 0.8 and 1.0 Etc). The pooled results revealed that drip lateral along each row, irrespective of irrigation water levels, produced significantly higher (20.2%) seed cotton yield as compared with check basin method. The increase in irrigation water level, irrespective of methods of irrigation, failed to cause any significant effect on seed cotton yield but stick yield increased significantly with increase in quantity of irrigation water. Drip irrigation with laterals along each row, irrespective of levels of irrigation water, resulted in significant increase (49%) in water use efficiency as compared to check basin method of irrigation. Water use efficiency, irrespective of method of planting, spectaculary decreased with increase in irrigation water. The results of the present study revealed that drip irrigation with lateral along each row at the lowest level of water (0.6 Etc) resulted in highest water use efficiency (22.0 kg/ha/mm) accompanied by 25% higher seed cotton yield and 18% of saving in irrigation water as compared with check basin method of irrigation.