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The understanding of the impact of nitrogen (N) fertilization on the field water cycle and corresponding water use efficiency (WUE) is very important for optimizing fertilization rates and conserving stressed water resources. We modeled soil moisture dynamics of maize (Zea mays L.), finger millet (Eleusine coracana Gaertn.), and lablab [Lablab purpureus (L..) Sweet] plots using calibrated HYDRUS‐1D model on two experimental sites (rain‐fed and irrigated) for three seasons under different N treatments. The results indicate that the effects of N depended on plant specific properties such as N‐fixation and drought tolerance, and on plant available water content governed by soil structure and rainfall seasonal variability. Maize WUE of plots which received 150 kg/ha of urea (46 %$\%$ N) were 10–30 kg/ha/mm higher than plots which received none; likewise, millet that received 50 kg/ha of urea had a 7–10 kg/ha/mm higher WUE than control plots in both experiments. However, differences in water cycle components were noticeable between N treatments only in the rain‐fed experiment, where higher N levels led to around 60 and 30 mm higher transpiration, 30 and 20 mm lower evaporation, and 30 and 15 mm lower percolation per season for maize and millet, respectively. In 2018, which was the driest year, the difference in maize WUE between the high and low N treatments was only 1 kg/ha/mm, which corresponded with low actual to potential transpiration ratios (<50%$<\!50\%$). This indicates higher sensitivity of maize to water stress compared to the other crops. The results of lablab indicate a positive impact of N fertilization on WUE only under water‐limited conditions. Core Ideas: HYDRUS models calibrated and validated based on soil moisture of minimum three soil profiles per crop per treatment.Transpiration reduction was calculated as a proxy for water stress and used to distinguish between nitrogen (N) and water stress effect.Favorable soil conditions such as good pH and water availability appear to minimize N effect on field water cycle.Precipitation amounts and plant‐specific properties interact to determine how N affects water balance and water use efficiency. [ABSTRACT FROM AUTHOR]