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Drought events seriously impact our society, yet the occurrence and evolution of extreme drought events, and the underlying mechanisms for them, remain largely unknown in ancient times. Here, we present a suite of novel microbial lipid-based proxy records from the Chinese Loess Plateau, spanning the past 700 k.y., which reveal two contrasting drought regimes associated with distinct climatic backgrounds before and after the Mid-Brunhes Event (MBE, ca. 430 ka). By measuring the relative abundance of archaeal isoprenoid glycerol dialkyl glycerol tetraethers (isoGDGTs) versus bacterial branched GDGTs (brGDGTs), i.e., the Σ isoGDGTs/Σ brGDGTs (Ri/b) ratio, and branched and isoprenoid tetraethers (BIT) index, all diagnostics of drought events, we find a significant shift in both the timing and magnitude of drought episodes across the MBE. Droughts identified during glacial-interglacial transitions were much larger in amplitude after the MBE than before, consistent with a transition from generally colder to warmer interglacial conditions reconstructed from bacterial brGDGTs. This may result from the increased air temperature and atmospheric CO2 concentrations, together with vegetation-wildfire feedbacks. In addition, distinct climate systems and feedbacks appear to have modulated drought dynamics across the MBE: Prior to the transition, droughts were more closely linked to weakening of the Indian summer monsoon, and were amplified by vegetation physiological effects under declining atmospheric CO2, while after the MBE, tropical Pacific sea surface temperature variability and El Niño−Southern Oscillation−like conditions exerted stronger control, with amplification by the CO2 radiative effect during periods of rapid warming. The shift after the MBE to higher temperatures and climate sensitivity somewhat analogous to the current global warming, which, in the context of projected hydrological changes in the populous region of Northern China, suggests more droughts are likely to occur in the future, accompanied by enhanced short-time scale hydroclimatic variability.