Assessment of satellite precipitation products' capability for monitoring drought is relatively new in tropical regions. The purpose of this paper is to evaluate the reliability of the Tropical Rainfall Measuring Mission (TRMM) Multisatellite Precipitation Analysis (TMPA) 3B43 product in estimating the standardized precipitation index (SPI) in the Kelantan River Basin, Malaysia from 1998 to 2014, by comparing it with data from 42 rain gauges. Overall, the TMPA-3B43 performed well in the monthly precipitation estimation, but performed moderately in the seasonal scale. Better performance was found in the northeast monsoon (wet season) than in the southwest monsoon (dry season). The product is more reliable in the northern and north-eastern regions (coastal zone) compared to the central, southern and south-eastern regions (mountainous area). For drought assessment, the correlations between the TMPA-3B43 and ground observations are moderate at various time-scales (one to twelve months), with better performance at shorter time-scales. The TMPA-3B43 shows similar temporal drought behavior by capturing most of the drought events at various time-scales, except for the 2008-2009 drought. These findings show that the TMPA-3B43 is not suitable to be used directly for SPI estimation in this basin. More bias correction and algorithm improvement work are needed to improve the accuracy of the TMPA-3B43 in drought monitoring.