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Study region: The Nebraska Sand Hills (NSH) lies in the western part of Nebraska, United States. We chose the north-eastern, central, and western parts of NSH with distinct climate, topography, and hydrology. Study focus: The study assesses the response of hundreds of shallow groundwater-fed lakes to drought. Total lake area (TLA), determined by classifying Landsat satellite images from 1984 to 2018, was juxtaposed with published Palmer Drought Severity Index (PDSI) and detrended cumulative PDSI (DeCumPDSI) at monthly and annual timescales. The PDSI and DeCumPDSI were time lagged to incorporate the preceding climatic effect (groundwater time lag) and evaluated against TLA using Bayesian regression analysis. New hydrologic insight for the region: TLA in the NSH respond to the seasonal as well as long-term climatic effects moderated by topography, surface, and subsurface hydrology. A higher determination coefficient R2 and lower mean square error of TLA at annual PDSI and DeCumPDSI illustrate the effect of long-term climatic fluctuations and groundwater influence: the evaporative losses from lakes are modulated by the lake-groundwater exchange, but the groundwater recharge has a longer response time to the drought. The study provides a simple method of assessment of the climate impact that results from the satellite data, gridded climate observation, and statistics for sensitive landscape of the NSH.