Drought is a frequent occurrence in semidesert areas of southern Ethiopia that significantly affect regional, social, economic, and environmental conditions. Lack of rainfall monitoring network, instrument measurement, and failure are major bottlenecks for agro-and hydroclimate research in developing countries. The objectives of this study were to evaluate the performance of CHIRPS rainfall product and to assess meteorological drought using SPI for the period 2000 to 2020 over Gamo Zone, southern Ethiopia. The performance of CHIRPS v2 was assessed and compared to station observations (2000–2020) in the study domain to derive SPI on a three-month timescale. The Pearson correlation coefficient (R), bias, probability of bias (PBias), mean error (ME), mean absolute error (MAE), root mean square error (RMSE), and Nash simulation efficiency (NSE) values across the zone for CHIRPS v2 were found to be 0.88, 1.02, 2.56, 0.25, 22.41, 33.14, and 0.77, respectively. The results indicate that CHIRPS performed good ability to analyze the drought characteristics in the Gamo Zone. The spatial and temporal distribution method of meteorological drought has been evaluated using the Climate Data Tool (CDT). The Standardized Precipitation Index (SPI) was computed using the gamma distribution method. The magnitude of (SPI-3) of monthly and seasonal (MAM) meteorological drought in the zone from 2000 to 2020. The result shows that the known historic drought years (2014, 2015, 2010, 2009, and 2008) were indicated very well. Furthermore, sever and extreme droughts were observed in 2008 and 2009 with drought duration of 6.7 and 6.3, respectively, in most areas of the zone. Hence, this study revealed that CHIRPS can be a useful supplement for measuring rainfall data to estimate rainfall and drought monitoring in this region.