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Early warning of drought in the southern Peruvian Andes could enable anticipatory action to reduce the economic, social and environmental impacts. However, accurate and timely drought prediction is inhibited by a complex hydroclimate across time and space, owing to mountainous topography and the influence of multiple interacting climate drivers. Current understanding of the mechanistic link between oceanic and atmospheric variability, and drought, is limited, and possible intra-annual variation in the driving mechanisms of drought remains unconstrained. In this study we explore the effects of large-scale climate variability on the dominant modes of atmospheric circulation over South America, and the subsequent influences on precipitation- and temperature-driven drought. We find that meteorological drought during the onset of the wet season occurs during La Niña, which inhibits the development of the Bolivian High. In contrast, during the peak and termination of the wet season, El Niño causes drought via a weakening and northeast shift of the Bolivian High. Propagation to soil moisture and vegetation drought occurs quickly and is broadly driven by these same driving mechanisms, although temperature variability becomes more influential than precipitation variability. Propagation is modulated locally by land cover heterogeneity; higher elevation grasslands are particularly vulnerable. Hydrological drought develops over longer timescales due to buffering by catchment-scale processes. We conclude that actionable early warning of drought in the southern Peruvian Andes must be localised in time and space to account for this complexity in drought driving mechanisms.