Limited-transpiration rate at high evaporative demand (‘LTR’ trait) has potential to improve drought adaptation, crop water productivity and food security. The quantification of the implications of LTR for water consumption, biomass accumulation and yield formation requires the use of dynamic crop modelling to simulate physiological and environmental processes and interactions in target environments. Here, a new transpiration module was developed for the Agricultural Production Systems sIMulator (APSIM NextGen) and used to simulate atmospheric and edaphic water stress on wheat crops. This module was parameterized with (i) data from a lysimeter experiment assessing genotypic variability in the LTR trait for four genotypes contrasting in transpiration efficiency, and with (ii) a more pronounced response to high evaporative demand. The potential of the LTR trait for improving crop productivity was investigated across the Australian wheatbelt over 1989–2018. The LTR trait was simulated to allow an increase in national yield by up to 2.6 %, mostly due to shift in water use pattern, alleviation of water deficit during grain filling period and a higher harvest index. Greatest productivity gains were found in the north-east (4.9 %, on average) where heavy soils allow the conserved water with the LTR trait to be available later at more critical stages. The effect of the LTR trait on yield was enhanced under the future climate scenario, particularly in the north-east. Limiting transpiration at high evaporative demands appears to be a promising trait for selection by breeders, especially in drought-prone environments where crops heavily rely on stored soil moisture.