Water scarcity in China’s north and northwestern regions is very serious and agricultural water use inefficiency is likewise high. This condition calls for immediate attention, drastic and a decisive shift towards innovative water-saving agriculture like that accomplished by the state of Israel. Therefore, this article followed a comprehensive literature review approach to explore Israel’s agricultural water utilization efficiency innovations and recommended lessons for China’s arid and semi-arid regions. For Israel, agricultural water utilization efficiency is not simply water-saving irrigation but also the inclusive exercise exhausting every conceivable economic water-management measure in holistic farm production, including the full utilization of limited natural precipitation, wastewater reuse, desalinated seawater and efficient management of irrigation network. It can be asserted that such commitments have the potential even for China to decrease groundwater abstraction rates, increase agricultural yields, and enhance food security by enlarging crop assortment while sustainably conserving water and the environment. Furthermore, the lessons and recommendations presented in this article are not only important for China but also several other countries and regions across the world facing similar problems.