At various locations in North Ethiopia (Tigray), field experiments were conducted from 2006 to 2009 to assess the crop response to water stress of tef (Eragrostis tef (Zucc.) Trotter) under rainfed, fully irrigated and deficit irrigation conditions. Observed soil water content (SWC), canopy cover (CC), biomass production (B) and final grain yield (Y) were used to calibrate and validate AquaCrop for tef. Data from an experiment in a controlled environment in 2008 were also considered in the calibration process. Simulations of SWC, CC, B and Y were evaluated by determining the index of agreement, the root mean square error, the coefficient of determination and the Nash–Sutcliffe efficiency. The statistical parameters showed an adequate fit between observations and simulations. The model was able to simulate for tef growing under rainfed condition the observed fast drop in SWC and CC when the rains ceased. The overall goodness of fit between the observed and simulated CC and SWC indicated that the thresholds for root zone depletion at which water stress (i) affects canopy development, (ii) induces stomata closure and (iii) triggers early canopy senescence were well selected. The normalised biomass water productivity (WP*) for tef was 14 g m−2 for the local variety and 21 g m−2 for the improved variety, which is a lot smaller than the WP* expected for C4 plants (30–35 g m−2). The results revealed an increase of 27% in reference harvest index (HIo) of tef in response to mild water stress during the yield formation of up to 33%. However, severe water stress causing stomata closure had a negative effect on HIo. Once it is properly calibrated, AquaCrop can provide room to improve the water productivity of tef by developing guidelines for good agricultural management strategies.