To optimize the use of limited water resources, surface irrigation systems in parts of China have introduced a new water saving irrigation method for rice termed alternate wetting and drying (AWD). The basic feature of this method is to irrigate so that the soil alternates between periods of standing water and damp or dry soil conditions from 30 days after crop establishment up to harvesting. However, many Chinese rice farmers still practice the continuous irrigation method with late- season drying of the soil. A comparative assessment of these two methods of on farm water management for rice was conducted at two sites within the Zhanghe Irrigation System (ZIS) in Hubei province of China for the 1999 and 2000 rice crops. The objective was to evaluate the impact of AWD on crop management practices and the profitability of rice production. In conjunction with irrigation district officials, two sites within ZIS were selected for study, one where AWD was supposed to be widely practiced (Tuanlin, TL) and one where it had not been introduced (Lengshui, LS). It was found that farmers at both sites do not practice a pure form of either AWD or continuous flooding. However, farmers in TL did tend to let the soil dry more frequently than their counterparts in LS. Because most farmers practice neither pure AWD nor pure continuous flooding, an AWD score was developed that measures the frequency with which farmers allow their soil to dry. This AWD score was not significantly correlated with yield after controlling for site and year effects and input use. AWD scores were also not correlated correlated with input use. We conclude that AWD saves water at the farm level without adversely affecting yields or farm profitability.