In this study, yield-water and profit function was used to obtain water demand function in agriculture sector. The results showed that the ratio of actual to potential Evapotranspiration had positive, significant effect on the ratio of actual to potential yield for wheat and barley. Also, square ratio of actual to potential Evapotranspiration had negative, significant relationship. After estimation of product function, water demand function for agriculture sector was obtained by profit function. Price elasticity of water demand for agriculture was -1.10 being less than -1 and showing that price policies can be an important factor in the control of non-optimum use of their valuable inputs.