The effects of water deficit on the yield and essential oil percentage of yarrow (Achillea millefolium L.) were investigated at the Alborz Research Center (Karaj, Iran). The treatments were irrigated based on total accumulated evaporation from a class A pan, namely at the rate of 30 mm (mild stress), 60 mm (medium stress), 90 mm (severe stress), full irrigation (no stress) and no irrigation (dry farming). The treatments were analyzed in a completely randomized blocks design. Data from three years were analyzed using a combined analysis method. For each treatment, the soil moisture content was measured by the weighing method (daily) before and after applying irrigation treatments based on the above mentioned rate of evaporation. The amount of water required for each treatment was measured by a current meter. The combined analysis of data gathered from the experiments revealed that the effect of the rate of water deficit stress, years (through varying metrological conditions) and also the interaction between them had a significant impact on the biomass, flower yield, harvest index and essential oil percentage of this species. The comparison of means showed that, in the first year, flower yield was 1169.70 kg/ha significantly different from the third year. The full irrigation treatment (no stress) produced the maximum flower yield of about 1360 kg/ha with no significant difference in comparison with the mild stress treatment. The effect of interaction between the years of experiment and the rate of induced stress level indicated that a full irrigation treatment in the second year produced the highest yield of 2551 kg/ha. The highest harvest index (ratio of flowers to biological yield) was observed under mild stress, particularly in the first year (22.01%). The highest essential oil percentage extracted from flowers was obtained under the severe stress treatment in the first year (0.58%), which is significantly different from other treatments.The experiment showed that full irrigation and severe stress reduced yield and essential oils. But mild and medium stresses increased flower and essential oil percentage.