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Vegetation growth is one of the important indicators of drought events. Greenness-related vegetation indices (VIs) such as Normalized Difference Vegetation Index (NDVI) and Enhanced Vegetation Index (EVI) are often used for the assessment of agricultural drought. There is a need to evaluate the sensitivity of water-related vegetation indices such as Land Surface Water Index (LSWI) to assess drought and associated impacts. Moderate-Resolution Imaging Spectroradiometer (MODIS) derived time series NDVI, EVI and LSWI data during 2000–2013 were compared for their sensitivity to drought at two tallgrass prairie sites in the Oklahoma Mesonet (Marena and El Reno). Each site has continuous soil moisture measurements at three different depths (5, 25 and 60 cm) and precipitation data for the study period (2000–2013) at 5-min intervals. As expected, averaged values of vegetation indices consistently lower under drought conditions than normal conditions. LSWI decreased the most in drought years (2006, 2011 and 2012) when compared to its magnitudes in pluvial years (2007, 2013), followed by EVI and NDVI, respectively. Because green vegetation has positive LSWI values (>0) and dry vegetation has negative LSWI values (<0), much longer durations of LSWI < 0 were found in the summer periods of drought years rather than in pluvial years. A LSWI-based drought severity scheme (LSWI > 0.1; 0 < LSWI ⩽ 0.1; −0.1 < LSWI ⩽ 0; LSWI ⩽ −0.1) corresponded well with the drought severity categories (0; D0; D1: D2; D3 and D4) defined by the United States Drought Monitor (USDM) at these two study sites. Our results indicate that the number of days with LSWI < 0 during the summer and LSWI-based drought severity scheme can be simple, effective and complementary indicator for assessing drought in tallgrass prairie grasslands at a 500-m spatial resolution. [ABSTRACT FROM AUTHOR]