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The effect of four levels of water availability on the yield and water use efficiency (WUE) of five subtropical perennial grasses was evaluated in a small plot trial under a rain shelter. The soil profiles were brought to 100% (W4 = the control), 75% (W3), 50% (W2) and 25% (W1) of field capacity on a weekly basis. Under W4 (control) and W3 conditions, yields did not differ significantly from each other. Where water became less available (W2 and W1), yields were significantly reduced, in comparison with the control (W4). Buffel grass, a drought-tolerant species, produced yields (11.7?20.0t ha−1) under moderate to severe water restriction (W1, W2 and W3), which were comparable with yields obtained with adequate water (W4) for traditionally-irrigated grasses such as couch grass (12.0?15.8t ha−1) and kikuyu (5.6?11.8t ha−1). All five grass species tended to use water more efficiently under moderate to severe water-limiting conditions (W1 and W2) than under control conditions (W4). These results also indicate that traditionally drought-tolerant grass species should not be overlooked when identifying species for use under irrigation.