Southeastern Australia is presently experiencing one of the worst droughts observed in the region in the last 200 years. The consequences of drought have been far reaching both for human consumptive uses and for aquatic ecosystems, and serve to highlight several important aspects of the nature of droughts, their ecological impacts, and how humans respond to them. Running water ecosystems are the dominant form of freshwater ecosystem in Australia, yet, despite the high frequency of drought we lack a basic understanding of the consequences of long-term droughts (as distinct from seasonal droughts) as an ecosystem disturbance, and more is known about drought effects on flowing than on standing waters. Drought is well defined and characterised meteorologically, but hydrologically its characterisation is equivocal. While drought severely impacts natural aquatic ecosystems, its effects have been and are exacerbated by direct and indirect anthropogenic modifications to streams and their catchments. In streams the major impacts are the loss of water and habitat availability, and the reduction, if not severing, of connectivity (lateral, longitudinal and vertical). Despite the relative frequency of drought in Australia we have failed to develop long-term management strategies capable of contending with droughts and their impacts, particularly in catchments where human disturbances have reduced the natural resistance and resilience of aquatic ecosystems, and where the demand for consumptive water use is high and rising. Here, we provide a commentary on drought and its implications for the management of freshwater ecosystems. We begin with a general discussion of drought and its impacts on streams and rivers before discussing some of the more specific management issues and response strategies that have arisen in response to the current drought in Australia. Throughout we consider global as well as local examples. We conclude by highlighting important knowledge gaps and by providing some general principles for better incorporating droughts and their impacts into river management strategies.