<p>This study evaluates irrigation strategies using the CROPGRO model to improve peanut farming in Arba Minch, Ethiopia. Given water scarcity, adopting deficit irrigation methods is vital for sustainable agriculture. Various deficit irrigation scenarios are analyzed to understand their impacts on peanut yield, water efficiency, and crop growth. The model was calibrated using 2022 season data and validated with 2023 season data. It was tested in a furrow irrigation system with four irrigation water levels: 100% (T1), 80% (T2), 60% (T3), and 40% (T4). Results showed average grain yields of 4.16 t ha⁻¹ (T1), 3.83 t ha⁻¹ (T2), 3.02 t ha⁻¹ (T3), and 2.23 t ha⁻¹ (T4), with water productivity ranging from 0.65 to 0.74. Evaluation performance of the DSSAT-CROPGRO model included soil moisture R² (0.86–0.89) &amp; RMSE (0.024–0.052), Grain yield R² (0.95–0.97) &amp; RMSE (0.03–0.05), dry biomass R² (0.88–0.93) &amp; RMSE (0.013–0.023), and Leaf area index R² (0.76–0.91) &amp; RMSE (0.028–0.03). The model’s reliability in predicting deficit irrigation impacts on land productivity offers valuable insights for tailored irrigation management in peanut cultivation in water-scarce areas like Arba Minch. These findings aid the development of sustainable agricultural approaches. Researchers and policymakers can leverage this model to improve water management and integrate it with agricultural practices for informed decision-making.</p>