Abstract: The water saving potential in agriculture plays an important role in scheme evaluation of water-saving performance, assessment of water use efficiency and optimal allocation of water resources. The evaluation indices and calculation methods are reviewed, and an innovative concept for water-saving potential in agriculture is proposed by taking into account water intake, water consumption and agriculture return water. The corresponding method for water-saving potential is given based on water balance principle. For different water-saving measures, the method can estimate the potential reductions in water intake and consumption, and the potential savings in agricultural return water. The new method is applied to the Liuyuankou Irrigation System (LIS) for a theoretical study on water-saving potential in agriculture. The result shows that the theoretical water saving in LIS could be as much as 4 636.59×10⁴ m³. In which, the potential reduction in water consumption would be the largest, and followed by water intake and the potential savings in agricultural return water. The result provides a theoretical basis to the implementation for water-saving measures and effective utilization of water resources in LIS.