Water stress is one of the critical abiotic stresses and limiting factors in the productivity of plants, especially in arid and semi-arid regions. In recent years, the application of bio-fertilizer and stress-modulating nanoparticles (NPs) is known as one of the eco-friendly strategies for improving plants quantity and quality under stressful conditions. In order to achieve the desirable essential oil (EO) quality and quantity of thyme in water deficit conditions, a 2-year field experiment was carried out as a split plot based on the randomized complete block design (RCBD), with 12 treatments and three replications. The treatments included different irrigation levels, containing irrigation at 80% field capacity (FC80) as no stress, 60% FC as moderate water stress (FC60) and 40% FC as severe water stress (FC40), as well as four different fertilizer sources, including non-application of fertilizer (control), application of arbuscular mycorrhizal fungi (AMF), chitosan NPs (CHT) and co-application of AMF+CHT NPs. The results demonstrated that the dry yield of thyme decreased by 13% and 40.3% under FC60 and FC40 water stress conditions. However, co-application of AMF+CHT NPs enhanced the dry yield of thyme by 21.7% in comparison to the control (non-application of fertilizer). The maximum EO content (2.03%) and EO yield (10.04 g 7 g m−2) of thyme were obtained under moderate water stress (FC60) fertilized with AMF+CHT NPs. Co-application of AMF+CHT NPs enhanced the EO content and EO yield of thyme by 17.1% and 42.7%, respectively. Based on the GC-MS and GC-FID analysis, 38 constituents were identified in the thyme EO, with the major constituents being thymol (35.64–41.31%), p-cymene (16.35–19.38%), γ-terpinene (12.61–13.98%) and carvacrol (2.78–3.93%) respectively. The highest content of thymol and γ-terpinene was obtained under moderate water stress (FC60) fertilized with AMF+CHT NPs. In addition, the highest content of p-cymene and carvacrol was observed in the severe w
