Mekong River Basin (MRB) experiences extreme droughts and floods frequently, due to the precipitation deficit across the basin. The meteorological droughts will have a profound impact on the distribution of soil moisture and hence agricultural productivity, which will lead to the reduction of surface water resources. It is therefore important to evaluate the deficits in hydrometeorological extremes, that is, precipitation, soil moisture, and streamflow to help decipher how one drought results in the other. In this study, a streamflow deficit index (SDI) has been proposed and applied to understand the changes in hydrology due to the fluctuations in precipitation and soil moisture in the Mekong River Basin (MRB). The study used percent normal (PN), a precipitation deficit index, and soil moisture deficit index (SMDI) to identify the initiation and sustenance of hydrological drought using SDI.The SMDI was obtained from soil moisture simulated using the soil and water assessment tool (SWAT) for the periods of 1980-2008. The study results suggested that the proposed index was able to represent the historical river flow deficit that persisted in the basin in the year 1992. Increasing variation in the streamflow deficit in parts of Thailand, Lao PDR, Vietnam, and Cambodia from the year 1992 was also captured by SDI. The flooding year 2000, which resulted in an economic loss of over 200 million USD, was also effectively captured by the proposed index. The lengthening of the streamflow drought, a metric used to represent drought propagation, was shorter by at least 2 months in forested catchments compared with that of agricultural catchments, which implies that any deficit in precipitation and soil moisture, will have a severe impact on agricultural basins. Similarly, the attenuation of both agricultural and hydrological drought was found to be smaller in forested subbasins than those in agricultural subbasins. The findings of the study will be useful for the timely identification of extreme hydrological events and for planning mitigation measures.