Drought, as a widespread natural calamity, leads to the most severe agricultural losses among all such disasters. Alterations in the yield of major global agricultural products are pivotal factors influencing food prices, food security, and land use decisions. China’s rapidly expanding demand for sustenance will persist over the forthcoming decades, emphasizing the critical need for an accurate assessment of drought’s impact on food production. Consequently, we conducted a comprehensive evaluation of the drought risk in China and its repercussions on agricultural output. Additionally, we delved into the underlying factors driving changes in yield for three primary grain crops (wheat, corn, and rice), which hold particular relevance for shaping effective strategies to mitigate future drought challenges. The findings divulge that both the number of drought months (DM) and the drought magnitude index (DMI) have displayed an upward trajectory over 60 years with a correlation coefficient of 0.96. The overall severity of meteorological drought has escalated across China, and it is particularly evident in regions such as the southwest and central parts of the Huang-Huai-Hai region, the northwestern middle region, and the Xinjiang region. Conversely, there has been some relief from drought conditions in southern China and the Yangtze River Delta. Shifts in the total grain output (TGO) during this period were compared: it underwent three stages, namely “fluctuating growth” (1961–1999), then a “sharp decline” (2000–2003), followed by “stable growth” (2004–2018). Similarly, changes in the grain planting area (GPA) experienced two stages, “continuous reduction” (1961–2003) succeeded by “stable growth” (2004–2018), while maintaining an upward trend for grain yield per unit area (GY) throughout. Furthermore, it was revealed that the drought grade serves as a significant constraint on continuous expansion within China’s grain output—where the drought damage rate’s influence on the TGO outweighs that from the GY. Our research outcomes play an instrumental role in deepening our comprehension regarding how drought impacts agricultural production within China while furnishing the scientific groundwork to devise efficacious policies addressing these challenges.