The potential mechanisms by which drought restricts cotton fiber cell wall synthesis and fiber strength formation are still not fully understood. Herein, drought experiments were conducted using two upland cotton cultivars of Dexiamian 1 (drought-tolerant) and Yuzaomian 9110 (drought-sensitive). Results showed that drought notably reduced sucrose efflux from cottonseed coats to fibers by down-regulating the expression of GhSWEET10 and GhSWEET15 in outer cottonseed coats, leading to promoted sucrose accumulation in cottonseed coats but decreased sucrose accumulation in fibers. Within cotton fibers, drought restricted the hydrolysis from sucrose to UDPG by suppressing sucrose synthase activity, and drought favored the conversion of UDPG to β-1, 3-glucan rather than cellulose by up-regulating GhCALS5. Hence, cellulose content was reduced, which was the main reason for the decreased fiber strength under drought. Moreover, drought promoted lignin synthesis by up-regulating the expression of Gh4CL4, GhPAL9, GhCCR5, GhCAD11, and GhOMT6, which partly offset the negative influence of reduced cellulose content on fiber strength. Compared with Yuzaomian 9110, the drought-tolerance of Dexiamian 1 was evidenced in the following ways: (1) slighter blocked sucrose flow from seedcoat to fiber, (2) less β-1, 3-glucan accumulation, and (3) more lignin biosynthesis under drought. Overall, this study provides new insights into the mechanism of drought impacting cotton fiber strength formation.