A green house experiment was conducted at Dejen, Northwest Ethiopia, with the objective of quantifying the critical soil water deficit and P levels that affect yield and yield components of soybean, and determine the critical soil water deficit levels influencing P uptake in soybean. The treatment consisted of factorial combination of four available soil water (ASW) deficit levels (0%, 25%, 50% and 75%) and four levels of phosphorus (0, 10, 20, and 30 kg·ha^-1) laid out in RCBD with four replications using soy bean variety Jalale as a planting material. The experiment was conducted under green house condition at Dejen, South Ethiopia during the 2011 academic year. Air dried soil was filled in the pots and seeds were sown on May 13, 2011. Four plants were maintained on each pot after thinning till flowering but after flowering, the total number of plants per pot was reduced to three as one plant which was used for measurement of root biomass. The water deficit treatments were imposed after the plants have been fully established 2 weeks after emergence just before branching stage. The water deficiency was imposed through maintaining the soil moisture content below field capacity at the deficit levels of 25%, 50% and 75%. The 75% of ASW deficit resulted in the longest days (45) to flowering and maturity (99) compared to the 0%, 25% and 50% deficit levels. Also, the 75% of ASW deficit level resulted in shorter plants (55 cm), the lowest leaf area (82.6 cm²), the highest root to shoot ratio (0.0168) and the lowest DM accumulation (161.3 gm^-2) compared to the other ASW deficit levels. Likewise, the 75% of ASW deficit level gave the lowest number of pods per plant (4.13), seeds per pod (1.69), 100 seed weight (2.54 g), seed yield (13.4 g·m^-1), above ground biomass (174.6 g·plant^-1) and harvest index (0.08) compared to the other ASW deficit treatments. The degree of sensitivity to drought increased dramatically (from 0.0423 at 25% to 0.9604 at 75%) with increase in water deficit level. Tissue analysis results indicated that the highest seed P concentration (1.285%) and uptake (432.5 g·plant^-1) were obtained at the 0 ASW deficit and 30 kg·P·ha^-1 and the lowest were obtained at 75% ASW deficit and all rate of applied P. On the contrary, the highest straw P concentration (1.88%) and uptake (552.7 g·plant^-1) were recorded at 75% and 25% of ASW deficit levels and 30 kg·P·ha^-1, respectively. However, the total P uptake was influenced only by ASW deficit levels in that the relatively minimum and maximum values were observed at 75% and 0% of ASW deficit levels, respectively. It can be concluded that the critical ASW deficit levels that affect yield and yield components of soybean and uptake of total P lie between 25% and 50% of available water deficit levels. The parameters started to decline significantly from the 50% of ASW deficit onwards. As it is a green house experiment, further study on more number of ASW deficit levels and soil types under different field conditions needs to be done to reach at a conclusive recommendation.