Continuous mono-cropping of rice-wheat (RW) system with conventional tillage (CT) based management practices have led to decline in soil health, groundwater table and farmers profit in north-west India. A medium-term (4 years) farmer’s participatory strategic research trial of basmati RW system was conducted to evaluate the effects of conservation agriculture (CA) based management practices on crop yields, water productivity, profitability and soil quality. Six treatments were compared varied in the cropping system, tillage, crop establishment and residue management. CA-based management under zero-till direct seeded rice-wheat-mungbean recorded 36% higher system yield than conventional till rice-wheat system (14.91 Mg ha−1). CA-based rice-wheat system and rice-wheat-mungbean system saved ~35% irrigation water compared to conventional RW system (2168 mm ha−1). Total water productivity (WPI+R) was improved by 67% with CA-based rice-wheat-mungbean system (0.90 kg grain m−3) over the conventional system. On system basis, 42% higher net return was recorded with CA-based rice-wheat-mungbean system compared to conventional system (USD 2570 ha−1). Mungbean integration in basmati RW system contributed 29% share in system net returns across the treatments. Soil chemical and biological properties were improved by ~40% and 150%, respectively, with CA-based management system.