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Abstract This study was conducted to assess drought trend, frequency and extremity during 1966–2012 over widely different climatic regimes in Iran. Two drought indicators, i.e. the standardized precipitation index (SPI) and the standardized precipitation evapotranspiration index (SPEI), were employed to characterize the droughts at 3, 6, 12 and 24 month time scales. In addition, the Mann–Kendall test was used for trend analysis. There was a declining (drying) trend in the SPI and SPEI at 76% and 85% or more, respectively, of the investigated sites. The SPIs were not well correlated with the SPEIs over the hyper‐arid/arid regions, demonstrating the significance of reference evapotranspiration (ET 0 ) inclusion for drought identification over these water‐limited areas. Furthermore, the SPEI appears not to be calculated reliably using temperature‐based ET 0 equations and also when wind speed data are missing at hyper‐arid/arid sites. More frequent droughts were detected during 1998–2012, which can be attributed to more recurrent La Niña events in this period. Seasonally, a greater increment in drought frequency at 3 and 6 month time scales was found in the March–April–May period. The most extended droughts and the most intensive dry months were also captured over 1998–2012 for most locations. In the majority of cases, it seems that the 1998–2001, 2007–2009 and 2010–2012 La Niña events caused long and severe droughts. The drought frequency increment and the most extreme drought incidences seem to have adversely impacted the agricultural sector over the studied areas. Consequently, there is a need for adaptation to negate the influences of frequent intensive dry episodes in Iran.