Food security for the growing global population is closely associated with the variations in agricultural yield at the regional scale. Based on this perspective, the current study was designed to determine the impacts of drought on wheat production in the Punjab province, which is the agricultural hub of Pakistan. Wheat is a staple food in Pakistan, and Punjab provides a major contribution to the total wheat production of the country. Therefore, Punjab is vital to scientific concerns regarding the evaluation of climatic impacts on the annual wheat yield. The current study offers a better understanding of the drought impacts on wheat in Punjab during 2001–2019. The Standardized Precipitation Index was used to assess the impact of drought stress on the wheat yield. Its temporal evolution indicates the recurrent appearance of drought episodes during the wheat cropping season. Furthermore, meteorological drought was noticed in all study years except for 2019. The results reveal that 2002 experienced severe drought conditions. The frequency of drought was calculated as 29% for SPI-12. The relationships between soil moisture, the Standardized Yield Residual Series (SYRS), and the detrended SPI at lags of 1–12 months indicate that zones 1 and 2 are more sensitive to dry conditions. The results presented in this study provide evidence to authorities responsible for developing policies in the context of natural hazards, particularly droughts, and for preparing drought mitigation plans and implementing the adaptation strategies to minimize the effects of drought on wheat yields.