Abstract. The present work aims to study the combined effect of drought and large wildfires in the Iberian Peninsula relying on remotely sensed data of vegetation dynamics and leaf moisture content, in particular monthly NDVI, NDWI and NDDI time series from 1999–2009, derived from VEGETATION dataset. The impact of the exceptional 2004/2005 drought on vegetation was assessed for vegetation recovering from the extraordinary fire season of 2003 and on the conditions that contributed to the onsetting of the fire season of 2005. Drought severity was estimated by the cumulative negative effect on photosynthetic activity (NDVI) and vegetation dryness (NDDI), with about 2/3 of Iberian Peninsula presenting vegetative stress and low water availability conditions, in spring and early summer of 2005. Furthermore, NDDI has shown to be very useful to assess drought, since it combines information on vegetation and water conditions. Moreover, we show that besides looking at the inter-annual variability of NDVI and NDDI, it is useful to evaluate intra-annual changes (δNDVI and δNDDI), as indicators of change in vegetation greenness, allowing a detailed picture of the ability of the different land-cover types to resist to short-term dry conditions. In order to assess drought impact on post-fire regeneration, recovery times were evaluated by a mono-parametric model based on NDVI data and values corresponding to drought months were set to no value. Drought has shown to delay recovery times for several months in all the selected scars from 2003. The analysis of vegetation dynamics and fire selectivity in 2005 suggests that fires tended to occur in pixels presenting lower vegetative and water stress conditions during spring and early summer months. Additionally, pre-fire vegetation dynamics, in particular vegetation density and water availability during spring and early summer, has shown to influence significantly the levels of fire damage. These results stress the role of fuel availability in fire occurrence and impact on the Iberian Peninsula.