The adverse impacts of Australia’s Millennium Drought on both surface and groundwater hydrological systems are extensively documented. During the Millennium Drought, the Murray Basin experienced a severe rainfall deficit. Our study revisited groundwater table trends in 451 wells within the Murray Basin during the drought from 1997 to 2009. These trends varied, 70% showed significant downward shifts, 19% were insignificant, and 11% even displayed upward trends. The results from K-means clustering analysis indicate a markedly slow recuperation of groundwater levels post-drought. We used multiple regression models to link interannual groundwater dynamics with climate variables, revealing climate as the primary driver of declining groundwater levels. This connection is influenced by land cover and thickness of the vadose zone, resulting in hysteresis effects and spatial variations. In cases with a thick vadose zone and minimal evapotranspiration, the influence of the Millennium Drought on the groundwater system is reduced. The increasing trends may also be related to lateral recharge from mountainous areas, human activities in adjacent irrigation districts, and east-west geostress. Our findings reveal the complex interactions between climate, land characteristics, and groundwater behavior during and after the Millennium Drought, holding significant implications for understanding hydrological processes under extreme drought conditions and for the sustainable management of water resources.