Trees and crops in agroforestry system can make the best use of water, nutrient, radiance and heat. However, competition may occur when resources are scarce, especially for the water competition in the warm temperate semi-arid region. Due to arid climate, less rainfall and poor irrigation condition, water is one of the major factors limiting the development of agriculture and forestry in the low hilly area of North China. Stable carbon isotope ratio (δ¹³C) of walnut (Juglans regia L.) -wheat (Triticum aestivum) intercropping system and monoculture wheat as well as sap flow of walnut tree at seedling establishment, jointing, filling and maturing growth period of winter wheat in the low hilly area of North China were researched. Water use efficiency (WUE) and water use (WU) were calculated by using the δ¹³C value, crop biomass, walnut sap flow and meteorological data. The results showed that the WUE of intercropping walnut, monoculture wheat and intercropping wheat were 10.771-21.233, 9.946-19.149 and 9.878-18.431 mmol C/mol H₂O, respectively. The WUE of intercropping wheat were significantly greater than that in monoculture wheat at wheat jointing growth period. The total water use of the walnut-wheat intercropping system was 1755.19 t/hm², which was 30.85% less than that in the monoculture wheat system (2538.13 t/hm²). Water consumption of the intercropping walnut accounted for 36.34% in the walnut-wheat intercropping system, respectively 62.09%, 30.80%, 35.58% and 27.24% at sowing-seedling establishment, jointing, flowering-filling and filling-maturing growth period of winter wheat. The walnut tree consumed the greatest amount of water at earlier growth period of winter wheat, and the less at vigorous growth stages of winter wheat. Contrary to the walnut, the water use of wheat was greater at its later growth period. Intercropping walnut and wheat staggered water demand periods and avoided temporal competition for water. Soil volumetric water content in the intercropping system was the greater the closer to the walnut tree in the shallow soil layer, and the less the closer to the walnut tree in the deep soil, which suggested that the walnut tree mainly absorbed deep water, while the intercropping wheat mainly absorb shallow water, it avoided spatial competition for water. The grain yield, total biomass and water use of monoculture wheat were respectively 26.79%, 27.12% and 36.30% (P=0.001、P=0.033、P=0.050) higher than that of the intercropping wheat. The average fruit yield of intercropping and monoculture walnut were respectively 0.88 kg and 0.94 kg per tree (P=0.829). However, yield LER (Land equivalent ratio) and WUE_e (WUE of economics) of the walnut-wheat intercropping system respectively reached 1.67 and 25.92RMB·mm^-1·hm^-2, improved obviously comparing with monoculture system. The walnut-wheat intercropping system utilized water with high efficiency and exhibited both production advantage and economic advantage at the same time.