The São Francisco River Basin (SFRB) plays a key role for the agricultural and hydropower sectors in Northeast Brazil (NEB). Historically, in the low part of the SFRB, people have to cope with strong periods of drought. However, there are incipient signs of increasing drought conditions in the upper and middle parts of the SFRB, where its main reservoirs (i.e., Três Marias, Sobradinho, and Luiz Gonzaga) and croplands are located. Therefore, the assessment of the impacts of extreme drought events in the SFRB is of vital importance to develop appropriate drought mitigation strategies. These events are characterized by widespread and persistent dry conditions with long-term impacts on water resources and rain-fed agriculture. The purpose of this study is to provide a comprehensive evaluation of extreme drought events in terms of occurrence, persistence, spatial extent, severity, and impacts on streamflow and soil moisture over different time windows between 1980 and 2020. The Standardized Precipitation-Evapotranspiration Index (SPEI) and Standardized Streamflow Index (SSI) at 3- and 12-month time scales derived from ground data were used as benchmark drought indices. The self-calibrating Palmer Drought Severity Index (scPDSI) and the Soil Moisture and Ocean Salinity-based Soil Water Deficit Index (SWDIS) were used to assess the agricultural drought. The Water Storage Deficit Index (WSDI) and the Groundwater Drought Index (GGDI) both derived from the Gravity Recovery and Climate Experiment (GRACE) were used to assess the hydrological drought. The SWDISa and WSDI showed the best performance in assessing agricultural and hydrological droughts across the whole SFRB. A drying trend at an annual time scale in the middle and south regions of the SFRB was evidenced. An expansion of the area under drought conditions was observed only during the southern hemisphere winter months (i.e., JJA). A marked depletion of groundwater levels concurrent with an increase in soil moisture content was observed during the most severe drought conditions, indicating an intensification of groundwater abstraction for irrigation. These results could be useful to guide social, economic, and water resource policy decision-making processes.