Soil salinity and the use of saline groundwater are two major constraints in crop production, which covers a ~1.0 billion ha area of arid and semi-arid regions. The improved drainage function of soil can modify the salty growing environment for higher agricultural production. The present study evaluated the effectiveness of cut-soiler-constructed rice residue-filled preferential shallow subsurface drainage (PSSD) to improve the drainage function and its effect on the yield, quality and plant–water relations of mustard over 2019–2021. Cut-soiler-simulated drains were made in a semi-controlled lysimeter (2 × 2 × 3; L*W*H m) as the main plot treatment in a double replicated split–split experiment with two soil types (subplot) and three irrigation water salinities (4, 8 and 12 dS m−1) as the sub-sub-plot treatment. The drainage volume of variable salinity (EC), dependent on the total water input, was substantially higher in the rainy season (April to October), i.e., 16.6, 7.76 and 12.0% during 2018, 2019 and 2020, with 1.7, 0.32 and 0.77 kg salt removal per lysimeter, compared to the post-rainy season. The mustard seed, straw and biological yields were improved by 31.4, 14.41 and 18.08%, respectively, due to a positive effect on plant–water relations. The mustard seeds produced in the cut-soiler-treated plots recorded higher oil, crude fiber and protein contents and a lower erucic acid content. The increase in salt load, by higher-salinity irrigation water, was also efficiently managed by using cut-soiler PSSD. It was found that the saline irrigation water up to 12.0 dS m−1 can be used under such PSSD without any extra salt loading. The present study showed the potential of cut-soiler PSSD in root zone salinity management by improving drainage in salt-affected arid regions.