ABSTRACT Gridded precipitation products (GPPs) can provide precipitation data at high spatial coverage and resolution; however, no assessment has been conducted on the performance of GPPs in drought monitoring for Iran’s major basins. In this study, the accuracy of three GPPs, i.e. the Global Precipitation Climatology Centre (GPCC), Climatic Research Unit (CRU), and Climate Prediction Centre (CPC), was evaluated to derive the nonparametric Standardized Precipitation Index (SPI) for the period 1987–2016. Six common statistical metrics and typical drought event characteristic criteria, including drought area and drought class identification, were used to measure the performance of the GPPs. The results indicate that GPCC was the best dataset, with high correlation, small errors, and high detectability. The results also revealed a slight difference between the GPPs regarding the correct diagnosis of the drought classes. The findings of this study can help decision makers to effectively use GPPs in drought monitoring for Iran.