AbstractThis review article focuses on the complex relationships between forests and water, particularly the effects of forests on streamflow during meteorological droughts. The impact of forests on water resources is a long‐standing research topic, but there are also many common beliefs that are not based on scientific evidence or only selective evidence. We critically examine the origin of some of the common public misconceptions and review the wealth of studies on how forests impact precipitation, soil water dynamics, evapotranspiration, and streamflow. Generally, reforestation increases evapotranspiration and decreases groundwater recharge and streamflow. However, some of the evaporated water will return as precipitation, potentially offsetting some of the increased evapotranspiration losses. Where reforestation leads to more extensive infiltration and recharge due to the effects of forests on the soil's hydraulic properties, it might increase streamflow during dry periods. Although these individual processes have been studied, predicting the impacts of forests on streamflow remains challenging as the effects are site‐specific and depend on many factors, such as the climate, the forest‐ and soil‐characteristics before and after reforestation, and the hydrogeological setting. However, a more accurate and nuanced understanding of the role of forests on hydrology and a better ability to predict where and when the net effects of reforestation are positive or negative is crucial for sustainable forest and water management.This article is categorized under: Science of Water > Science of Water Science of Water > Water and Environmental Change Science of Water > Hydrological Processes Engineering Water > Sustainable Engineering of Water