The practice and management of subsurface drip irrigation (SDI) on heavy clay soils is poorly understood. Over-irrigation can lead to excessive runoff and drainage, with associated negative environmental consequences. Experiments were conducted in 2001/2002 and 2002/2003 on cotton (Gossypium hirsutum) in a Vertisol in Australia to evaluate the effect of SDI at various application rates on cotton yield and quality, and the results were compared with those for conventional furrow irrigation. Irrigating with SDI that supplied 50% or 75% of daily crop evapotranspiration (ETc) maintained a dry upper soil profile throughout the season. SDI at 50% ETc could potentially capture 250mm more rain during the season compared to SDI 90% ETc, and even more than furrow irrigation. However, supplying only 50% ETc with SDI hastened the maturity of the crop by on average 25 days compared with furrow irrigation and higher SDI rates, fewer bolls were set and yields were lower than in the other treatments. Nevertheless, a shorter season, if yield sacrifice is acceptable, favours logistics when integrating winter crops with summer cotton. It also reduces the number and cost of pesticide sprays and irrigation. Yield plateaued when 75% or more of daily ETc was supplied by SDI. The two drier treatments (SDI at 50% and 75% of ETc) had consistently higher water use efficiencies (WUE) for lint production compared with those of the two wetter SDI treatments (SDI at 90% and 105/120% ETc). All SDI treatments were also more efficient in the first year in the use of water for lint production than was furrow irrigation, but improved irrigation management in the form of faster irrigation and reduction of tail water in the second year obviated the advantage of SDI. Irrigation of cotton with SDI at 75% ETc offered significant benefits in terms of saved irrigation water over wetter SDI treatments, resulted in the highest average WUE for lint production over the two years, and reduced drainage and runoff compared with higher SDI rates and furrow irrigation.