Water scarcity is a critical constraint to sustainable agricultural production in arid and semi-arid regions. This study evaluated the effectiveness of subirrigation controlled drainage (SCD) systems in improving water use efficiency, soil conditions, and productivity of Egyptian clover (Trifolium alexandrinum L.) over two consecutive growing seasons (2022–2024). Three drainage treatments were investigated: subirrigation controlled drainage with water table depths of 0.4 m (SCD-0.4) and 0.8 m (SCD-0.8), and conventional free drainage at 1.2 m (SFD-1.2). The results demonstrated that SCD significantly reduced irrigation water requirements, achieving water savings of up to 27% under SCD-0.4 compared with conventional drainage. The shallow water table enhanced groundwater contribution to crop evapotranspiration, reaching over 40%, which improved soil moisture availability and reduced soil water depletion. Consequently, SCD-0.4 increased fresh and dry biomass yields by approximately 18% and significantly improved water productivity and irrigation water productivity. However, controlled drainage led to increased soil salinity due to reduced leaching, particularly in upper soil layers. Economic analysis revealed that SCD-0.4 achieved the highest net returns and water use profitability. Overall, controlled drainage at shallow depths represents an effective strategy to enhance water productivity, crop yield, and economic efficiency, although long-term salinity management must be considered for sustainable implementation.