Understanding the spatial and temporal characteristics of drought is vital for the agricultural, hydrological, ecological, and socio-economic systems. This study investigates the spatial and temporal variation of drought characteristics in Nepal using the Standardized Precipitation Evapotranspiration Index (SPEI) based on observational monthly temperature and precipitation data from 1987 to 2017. The drought variation was observed in the Western, Central, and Eastern regions of Nepal at short-term (SPEI4) and long-term (SPEI12) timescales, revealing the increased drought frequency, duration, and severity in the recent decade. The frequency of short-term drought (SPEI4 ≤ -1) has elevated by 15%, 17%, and 15% in Western, Central, and Eastern regions, respectively, during 2005–2017 compared to 1987–2004. Moreover, the interdecadal increase of drought characteristics was prominent after 2004, revealed by the SPEI12 with aggravated and prolonged drought episodes. The summer drought index (SPEI4-Sep) showed an interannual variation in the Western region at a seasonal timescale, whereas decadal variation in the Central and Eastern regions. Meanwhile, summer drought events increased five times in the Central region, two times in the Eastern Region, and did not observe any change in the Western region after 2004. The large-scale atmospheric circulations revealed the negative summer precipitation anomalies due to weakening wind anomalies with anti-cyclonic circulation and moisture divergence over the Indo-Gangetic plain and Nepal, respectively, leads to enhanced drought after 2004. Furthermore, the moisture transport from the Arabian Sea and the Bay of Bengal to the study region is weaker, resulting in more drought events, especially in the Central and Eastern regions.