Abstract: Effects of nitrogen rates on photosynthesis, transpiration and water use efficiency of oriental tobacco leaves in arid environment in Baoshan was studied in order to determine the optimum rate of nitrogen in arid environment. The results showed that stomatal conductance, intercellular CO₂ concentration, transpiration rate decreased, and efficiency of water use increased with higher inorganic nitrogen fertilizer rates. The amount of dry matter accumulation per unit leaf area was largest with the highest nitrogen rate, and lowest with moderate nitrogen rate. Nitrogen rate of 75 kg/ha was most useful for lowering transpiration rate, improving its water use efficiency and getting a higher quality of dry matter.