Stone mulch offers potential benefits for water conservation in many rain-fed agricultural systems of the arid regions. The effects of stone mulch on transpiration and grain yield were examined for a durum wheat crop grown under soil water deficit stress. In a greenhouse trial, stone mulches with two levels of ground coverage significantly decreased soil-surface evaporation and increased crop transpiration. The transpiration increase contributed to increases both in biomass and grain yield. Field experiments over two cropping seasons confirmed yield increases of 12% in soil half-covered and 24% in soil fully-covered by stones. These significant yield increases indicate the potential usefulness of stone mulch technology in rain-fed cereal cropping. It is suggested that stones should not be removed from cereal fields unless their presence obstructs management severely. It remains to develop technologies for effectively managing soils containing large numbers of sizable stones in order to obtain the benefits of the potential yield increase associated with their presence on the soil surface.