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Areas throughout the southeast and other parts of the United States faced drought conditions of increasingly catastrophic proportions during late 2007 and early 2008, and North Carolina was no exception. Traditional conservation measures and restrictions to outdoor water uses were no longer sufficient to adequately reduce demands on water systems. To facilitate interagency dialog on ways to address the drought, the North Carolina Department of Environment and Natural Resources Division of Water Resources and the Department of Crime Control and Public Safety Emergency Management Division hosted a drought tabletop exercise. Water utilities used the tabletop exercise as well as a draft drought‐response toolbox to help them decide on response actions for worsening drought conditions. The tabletop exercises described in this article can be used by state water agencies anywhere in the United States to prepare for a drought. States and water systems can create and conduct drought exercises like the ones described here, add drought factors and actions to their emergency response plans, and work with other state and local agencies to include drought scenarios in other types of security and emergency response training exercises.