Droughts are major natural disasters for many parts of the world. Dry areas, where the precipitation pattern is markedly seasonal, or is otherwise highly variable, are the most susceptible. The Canadian Prairies, together with the U.S. Great Plains, are one such area. While immediate loss of life is seldom a feature of most droughts, malnutrition and even starvation do follow severe droughts in some parts of the world. In Canada, economic losses, particularly in the agricultural sector, may reach several hundred millions of dollars in a drought year, with major socio‐economic repercussions affecting the entire region. Environmental damages include soil degradation and erosion, vegetation damage, slough and lake deterioration and wildlife loss. Unlike most other natural disasters, drought onset is difficult to identify. Droughts develop slowly, and until human activity begins to be affected by an on‐going reduction of precipitation, their existence is unrecognized. Development and application of specific soil moisture and drought indices based on cumulative precipitation deficits have enhanced drought monitoring programs. These in turn provide guidance on the need for mitigative measures that can be initiated early in the course of a drought. Any improvement in the timely application of these measures is, however, strongly dependent on being able to determine the drought's course, extent and likely severity at the earliest stage possible. The identification of precursor conditions for past drought has raised the possibility that the likelihood of a drought occurring in a particular year or growing season might be predictable. Teleconnections between North American precipitation patterns and ENSO events and other surface boundary conditions in the North Pacific have been detected. Forecasting seasonal temperature and perhaps precipitation anomalies appears to be potentially feasible using a suitable merging of precursor parameters and modelling methodologies. Clearly, future research must focus both on those precursors that have been identified and on a search for possible new ones. Development of better forecasting methodology is also essential. Research activity to identify and evaluate new mitigative measures should also be increased to keep pace with the prospects of drought predictability.