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Over a 3 year period, selected sites in three categories of rangeland -- good, moderate and poor -- were subjected to varying levels of frequency and intensity of defoliation. Three watering regimes -- normal, below-normal and above-normal -- were applied. The effects of defoliation and levels of soil water were evaluated in terms of the production of above-ground phytomass and water-use efficiency (WUE) in relation to evapo-transpiration (Et). For all treatments, rangeland in good condition (RC1) produced significantly more phytomass (p<=0·01) and used water more efficiently (p<=0·01) than those in moderate and poor condition (RC2 and 3). High intensity/high frequency defoliation caused a significant (p<=0·01) increase in phytomass production and WUE, under conditions of high soil water availability. Generally, rangeland condition in interaction with the soil water content are the main determinants of optimal production and WUE. Statistically significant (p<=0·01) linear relationships between phytomass production and Et were determined for all rangeland conditions and defoliation treatments. In degraded rangeland, water is used inefficiently regardless of the quantity of water received.