Nitrogen (N) uptake is regulated by water availability, and a water deficit can limit crop N responses by reducing N uptake and utilization.  The complex and multifaceted interplay between water availability and the crop N response makes it difficult to predict and quantify the effect of water deficit on crop N status.  The nitrogen nutrition index (NNI) has been widely used to accurately diagnose crop N status and to evaluate the effectiveness of N application.  The decline of NNI under water-limiting conditions has been documented, although the underlying mechanism governing this decline is not fully understood.  This study aimed to elucidate the reason for the decline of NNI under water-limiting conditions and to provide insights into the accurate utilization of NNI for assessing crop N status under different water–N interaction treatments.  Rainout shelter experiments were conducted over three growing seasons from 2018 to 2021 under different N (75 and 225 kg N ha^–1, low N and high N) and water (120 to 510 mm, W0 to W3) co-limitation treatments.  Plant N accumulation, shoot biomass (SB), plant N concentration (%N), soil nitrate-N content, actual evapotranspiration (ET_a), and yield were recorded at the stem elongation, booting, anthesis and grain filling stages.  Compared to W0, W1 to W3 treatments exhibited NNI values that were greater by 10.2 to 20.5%, 12.6 to 24.8%, 14 to 24.8%, and 16.8 to 24.8% at stem elongation, booting, anthesis, and grain filling, respectively, across the 2018–2021 seasons.  This decline in NNI under water-limiting conditions stemmed from two main factors.  First, reduced ET_a and SB led to a greater critical N concentration (%N_c) under water-limiting conditions, which contributed to the decline in NNI primarily under high N conditions.  Second, changes in plant %N played a more significant role under low N conditions.  Plant N accumulation exhibited a positive allometric relationship with SB and a negative relationship with soil nitrate-N content under water-limiting conditions, indicating co-regulation by SB and the soil nitrate-N content.  However, this regulation was influenced by water availability.  Plant N accumulation sourced from the soil nitrate-N content reflects soil N availability.  Greater soil water availability facilitated greater absorption of soil nitrate-N into the plants, leading to a positive correlation between plant N accumulation and ET_a across the different water–N interaction treatments.  Therefore, considering the impact of soil water availability is crucial when assessing soil N availability under water-limiting conditions.  The findings of this study provide valuable insights into the factors contributing to the decline in NNI among different water–N interaction treatments and can contribute to the more accurate utilization of NNI for assessing winter wheat N status.