Drought is a global threat to public health. Increasingly, the impact of drought on mental health and wellbeing is being recognised. This paper investigates the relationship between drought and wellbeing to determine which drought indices most effectively capture wellbeing outcomes. A thorough understanding of the relationship between drought and wellbeing must consider the: (i) three aspects of drought (duration, frequency and magnitude); (ii) different types of drought (e.g. meteorological, agricultural, etc.); and (iii) the individual context of specific locations, communities and sectors. For this reason, we used a variety of drought types, drought indices, and time windows to identify the thresholds for wet and dry epochs that enhance and suppress impacts to wellbeing. Four postcodes in New South Wales (NSW), Australia are used as case studies in the analysis to highlight the spatial variability in the relationship between drought and wellbeing. The results demonstrate that the relationship between drought indices and wellbeing outcomes differs temporally, spatially and according to drought type. This paper objectively tests the relationship between commonly used drought indices and wellbeing outcomes to establish if current methods of quantifying drought effectively capture wellbeing outcomes. For funding, community programs and interventions to result in successful adaptation, it is essential to critically choose which drought index, time window and wellbeing outcome to use in empirical studies. The uncertainties associated with these relationships must be accounted for and it must also be realized that results will differ based on these decisions.