Abstract. The frequency and intensity of drought are increasing dramatically with global warming. However, few studies have characterized drought in terms of its impacts on ecosystem services, the mechanisms through which ecosystems support life. As a result, little is known about the implications of increased drought for resource management. This case study characterizes drought by linking climate anomalies with changes in the precipitation–runoff relationship (PRR) on the Loess Plateau of China, a water-limited region where ongoing revegetation makes drought a major concern. We analyzed drought events with drought durations ≥ 5 years and mean annual precipitation anomaly (PA) values ≤ −5 % during drought periods. The results show that continuous precipitation shifts are able to change the water balance of watersheds in water-limited areas, and multi-year drought events cause the PRR to change with a significantly decreasing trend (p < 0.05) compared to other historical records. For the Loess Plateau as a whole, the average runoff ratio decreased from 10 to 6.8 % during 1991–1999. The joint probability and return period gradually increase with increasing of drought duration and severity. The ecosystem service of water yield is easily affected by drought events with durations equal to or greater than 6 years and drought severity values equal to or greater than 0.55 (precipitation ≤ 212 mm). At the same time, multi-year drought events also lead to significant changes in the leaf area index (LAI). Such studies are essential for ecosystem management in water-limited areas.