Field experiments were conducted on a Typic Hapludoll (Mollisols) soil in the Indo-Gangetic Plains of India during the 2008 and 2009 rainy seasons to (1) find out the effect of irrigation schedules and plant spacing on physiological parameters, yield and water productivity of two rice cultivars under System of Rice Intensification (SRI), and (2) compare the performance of SRI with conventional transplanting (CT). Treatments under SRI included 12 combinations of three irrigation schedules, viz. irrigation at 1, 3 and 5 day(s) after disappearance of ponded water (DADPW), two spacing intervals (20 × 20 cm and 25 × 25 cm) and two cultivars (‘Pant Dhan 4’ and ‘Hybrid 6444’). The two control treatments were the CT of each cultivar. The experiment was set in a factorial randomized complete block design replicated thrice. The net photosynthetic rate (NPR) of the topmost fully expanded leaf at tillering and that of flag-leaf at flowering stage was affected significantly by irrigation schedules. Irrigating rice crop at 1 or 3 DADPW, being at par with each other, recorded significantly higher NPR than 5 DADPW. The increase in NPR at 1 and 3 DADPW was 17.1% and 8.4% at tillering and 13.6% and 6.1% at flowering stage, respectively, compared with that at 5 DADPW (tillering: 12.78 μmol CO2 m−2 S−1, flowering: 16.01 μmol CO2 m‑2 S−1). At closer spacing (20 × 20 cm) the cultivars did not differ significantly for NPR; however, at wider spacing (25 × 25 cm), ‘Hybrid 6444’ showed significantly higher NPR than ‘Pant Dhan 4’. Between two methods, SRI recoded higher NPR. Dry matter accumulation (DMA) in leaves and grains declined with delay in irrigation from 1 to 5 DADPW. Wider spacing significantly enhanced DMA in stems and grains. ‘Hybrid 6444’ showed higher DMA in all plant parts than ‘Pant Dhan 4’. Grain yield was not affected significantly by irrigation schedules in 2008, while in 2009, irrigation at 1 and 3 DADPW resulted in 12.8% and 8.0% higher grain yield, respectively, than 5 DADPW (5.84 t ha−1). Wider spacing was superior to closer spacing. SRI improved grain yield by 16.9% and water productivity by 18.5% over CT.