An experiment was carried out using a randomized complete block design with 4 replications to study the effect of water deficit stress on essential oil of balm. The factors studied included 5 levels of water deficit stress that were T-1 (100% field capacity), T-2 (80% field capacity), T-3 (60% field capacity), T-4 (40% field capacity) and T-5 (20% field capacity) respectively. The results showed that water deficit stress significantly affected biological yield, essential oil yield, essential oil %, leaf yield, height of plant, tiller number, stem diameter, stem yield and internode length in P < 0.01. Highest biological yield and height of plant were achieved under T-1, highest essential oil yield was achieved under T-3 and highest stem diameter and essential oil % were achieved under T-5. The results of this experiment showed that essential oil yield was reduced under water deficit stress but essential oil % increased under this condition.