Traditional in situ observation interpolation techniques that provide rainfall data from rain gauges have limitations because they are discrete point-based data records, which may not be sufficient to assess droughts from a spatiotemporal perspective. Considering this limitation, this study has developed a run-off model-a fully satellite-based method for monitoring drought in Peninsular Malaysia. The formulation of the run-off deficit uses a water balance equation based on satellite-based rainfall and evapotranspiration data extracted respectively from calibrated TRMM multi-satellites precipitation analysis data (TMPA) and moderate resolution imaging spectroradiometer data (MODIS). The run-off deficit was calculated based on per pixel spatial scale and allowed to produce the continuous and regular run-off maps. The run-off model was tested and evaluated in a one drought year (2005) within a span of three years (2003)(2004)(2005) over the Kelantan (3448 km 2 ) and Hulu Perak (3672 km 2 ) catchments of Peninsular Malaysia. The validation results show that (1) monthly TMPA rainfall and MODIS evapotranspiration data significantly improved after calibration; (2) satellite-based run-off data is not only strongly correlated with actual steam flow, but also with spatiotemporal variation of run-off in drought-affected forest catchments. The most severely drought-affected forest catchments that experienced the run-off deficits were Hulu Perak, Ulu Gading, Gunung Stong and Relai over Kelantan. The real time run-off change analysis shows that drought started in January and reached its peak in July of 2005. It was therefore demonstrated that this fully satellite-based run-off deficit model is as good as a conventional drought-monitoring indicator, and can provide not only drought distribution information, but it also can reflect the drought-induced impacts on stream flow, forest catchment and land-use.