The pepper producers in the Republic of Macedonia have used drip irrigation systems to increase yield in recent years, but more research is still needed, related to irrigation scheduling and precise requirement of nitrogen fertilizer to maximise pepper yield. Therefore, a two year experiment was conducted in a plastic house to determine the nitrogen fertilizer use efficiency (NFUE) and yield potential of pruned pepper as affected by irrigation and fertilization regime. Four experimental treatments were applied in this study. Three of the treatments were drip fertigated (DF1, DF2, DF3), while the fourth treatment was furrow irrigated with conventional fertilization (ØB). The labelled urea with 1% concentration of a stable isotope of nitrogen (15N) was applied for determination of NFUE. The results of this study clearly showed that increased NFUE and pepper yield depend on irrigation and fertilization regime. Namely, NFUE was significantly increased with the application of nitrogen fertilizer through drip irrigation system as compared to conventional fertilization with furrow irrigation. Also, drip fertigation frequency positively affects percentage increase of NFUE. Furthermore, our results showed that drip fertigation treatments resulted in significantly higher pepper yields in comparison to conventional fertilization. Also, drip fertigation frequency at four and two days (DF2 and DF1) resulted in higher yields when compared with drip fertigation scheduled by using tensiometers (DF3). Generally, to reach acceptable pepper yield with high NFUE, we recommend drip fertigation with a frequency of two to four days combined with two main shoots of pruned pepper in order to increase farmer’s income and to minimize the environmental impact.