Bell pepper (Capsicum annuum L. cv. 11b 14) was grown under field conditions. The aim was to investigate the effects of mulch on plant growth, water use efficiency (WUE), fruit yield and quality, leaf relative water content, and macro-nutrition of bell pepper grown at different water regimes and nitrogen levels. Treatments were (1) bare soil+water stressed (WS); (2) bare soil+well-watered (C); and (3) black polyethylene mulch+water stressed (BPM+WS). Three different nitrogen (N) levels (70, 140, and 210 kg ha) were combined with the above treatments. Water stress was created by irrigating plants once every 5 days at 75% A pan (Epan) evaporation, compared with the control (C) that received 125% every other day. Water stress caused reductions in all parameters measured compared with unstressed (C) treatment. Using BPM covers improved fruit yield, fruit size, plant dry matter, relative water content, and chlorophyll concentrations in leaves in the stressed treatments and this treatment also improved N availability to the plants by keeping soil moisture higher. Black polyethylene mulch increased WUE about 12% more compared to WS treatment. Water stress enhanced electrolyte leakage by impairing membrane permeability compared to control treatment. Mulching substantially decreased electrolyte leakage (EL) in water stressed-plants. Increased N significantly enhanced leaf N in the unstressed plants and plants with mulch application. However, N concentration did not increase with the same trend as in the water stressed plants with increasing N concentration. Water stress reduced leaf concentrations of all nutrients tested [nitrogen (N), phosphorus (P), potassium (K), calcium (Ca), and magnesium (Mg)]. However, mulching enhanced the concentrations of these nutrients, but their concentrations were still lower than those in the control (C) treatment. These results clearly indicate that mulching mitigates negative effects of water stress on plant growth and fruit yield in field grown pepper plants particularly in semi-arid conditions and also increases the N availability to the plants.