Abstract: Academic evidence showing negatively effects of allelochemicals on optimized intercropping systems are largely lacking. To that end, a pot experiment was conducted to study the mechanism of allelopathy in intercropping systems. Three modes of cropping systems (monocropped wheat, monocropped faba-bean and intercropped wheat/faba-bean) were designed with three irrigation rates (45%, 60% and 75% of field capacity). The effects of irrigation rates and 3-methyl-phenol on yields of the different cropping systems were analyzed. Competition between wheat and faba-bean in the wheat/faba-bean intercropping system was also determined. Results indicated that intercropping significantly influenced the biological and economic yields of wheat. Compared with monocropped wheat, yield of intercropped wheat increased under irrigation rates of 60% and 75% filed capacity. However, the reverse was noted in economic yield under irrigation rate of 45% filed capacity. The yield of intercropped faba-bean was significant higher than that of the monocropped faba-bean under different irrigation rates. Allelopathic effects of 3-methyl-phenol on the yield of wheat and faba-bean were negative. Intercropping mitigated the degree of negative allelopathic effect on faba-bean. 3-methyl-phenol significantly enhanced the competitive capacity of wheat over faba-bean in intercropped systems. The competitive capacities of wheat over faba-bean in intercropping system with 3-methyl-phenol were 24.82%, 19.26% and 79.30% higher than those of intercropping systems without 3-methyl-phenol under irrigation rates of 45%, 60% and 75% of field capacity, respectively. On the other hand, increasing irrigation rate weakened the competitive capacity of wheat in intercropping systems. The competitive capacities of wheat over faba-bean in their intercropping systems with and without 3-methyl-phenol under 75% irrigation rates were 158.08% and 79.67% lower than that under 45% irrigation rate, respectively.