This study examines the wheat profitability and factors affecting its production under the Kareze irrigation system in Qilla Abdullah, Balochistan, Pakistan, during the year 2002-2003. The profitability of wheat was estimated using enterprise budget technique whilst log-linear Cobb-Douglas production function was developed to analyze the factors affecting wheat production. The result indicates that wheat is a profitable crop under Kareze irrigation system. Water availability through relatively inexpensive Kareze water and high use of inputs are the major contributors to high net returns and benefit cost ratio. The empirical results suggest that Diammonium Phosphate (DAP) Farm Yard Manure (FYM) and size of the plot are the key inputs affecting wheat production. The comparison of farm-level inputs use with the recommended inputs use by the national and international agricultural organizations show that farmers are roughly applying the recommended inputs level, which is also one of the main reasons for obtaining high wheat yield. Based on the empirical findings, it is recommended that farmers should increase the quantity of diammonium phosphate and farm yard manure to obtain maximum yield.