The experiment was conducted to assess the effects of nitrogen (N) rate and time of application on N use efficiency (NUE) of bread wheat, and their association with grain yield and protein content. Factorial combinations of four N levels, two bread wheat varieties and three timings of N applications were laid out in a randomized complete block design. N rate significantly influenced grain yield, protein content, N uptake efficiency, N biomass production efficiency, N utilization efficiency, N use efficiency for grain and N use efficiency for protein yield. Time of N application had highly significant effect on grain yield, protein content and NUE traits. Rate of N application and variety were significantly interacted to influence grain yield. Grain yield for Madda Walabu found sharply increase with each increase in N application rate. The improved variety provided significantly higher grain yield, N utilization efficiency and N use efficiency for grain yield (NUEGY) when N was applied 1/4 at planting, 1/2 at mid-tillering, and 1/4 at anthesis. Variations in NUEGY were explained more by the variations in N uptake efficiency. Harvest index contribution to NUEGY was higher for the local variety. Although NUE significantly decreased with increasing N rates, yield response of the varieties did not plateau out.