Dam operations have had significant impact on the natural flow regimes in most of the world large rivers. The Mekong River in Southeast Asia was one of the few remaining rather intact large river basins. The natural flow regime, however, is changing due to the recent hydropower development of many large dams in both mainstream and tributaries. The impacts of dams operation on the natural flows and the recent droughts in particular were examined in Chiang Saen, close to the Chinese dams on the Mekong River mainstream. We used the Indicators of Hydrological Alteration (IHA) to examine the impacts of dam operation on water discharge. The water discharge was obviously lower in the dry seasons (1-, 3- and 7-day minima) in the post-dam period (1992–2010) than in the pre-dam period (1960–1991). The water discharge in the wet seasons (1-, 3- and 7-day maxima) was marginally lower in the post-dam period. The monthly mean value averaged over the entire post-dam period was higher in July (an increase of 15%), but lower in August (a decrease of 9%) than in the pre-dam period, suggesting the reservoirs released more water for hydropower generation in July, but started to store water in August. The early monsoon withdrawal and low monsoon rainfall in 2009, as well as very low rainfall in the dry season of 2010 resulted in 2010 severe drought in Yunnan and the lower Mekong basin. Water flows at Chiang Saen were dominated by precipitation upstream, but the existing reservoirs (Manwang, Dachaoshan, Jinhong, and Xiaowan until 2010) have altered the water flow to a certain degree at Chiang Saen. However, climate change, especially temperature increase of 0.2–0.4 C°/10 years and glacial melting in the river origin area, and more importantly, recent extreme weather events, could put the Chinese reservoirs at the center of debate. Our results can be used to enhance the understanding of the potential future hydrological changes in the basin due to the rapid hydropower development.