Rural, regional and remote Australian communities are exposed to the complex interactions of environmental, economic and social stressors that reduce resilience and can exacerbate the impacts of drought. Already vulnerable to drought due to economic reliance on agriculture, these communities are at risk of experiencing negative mental health and wellbeing as a result of their collective exposure to drought and the extant inherent stressors of these communities (including shifting demographics, access to services etc.). The Australian Rural Mental Health Study, a longitudinal study that investigated the mental health of people living in rural, regional and remote communities in NSW, Australia has been conducted. Findings from qualitative and quantitative analyses indicated a relationship between drought, degree of remoteness, socioeconomic disadvantage, reduction in wellbeing and an increase in adverse mental health outcomes. Further, these relationships impact individual adaptive capacity. This research quantifies these relationships and resultant changes in adaptive capacity by drawing on case studies to provide empirical evidence. Outcomes from this research contribute to an increased understanding of the impacts of drought within the multifaceted context of rural, regional and remote communities. This understanding is essential to increase adaptive capacity and provide opportunities to implement successful drought adaptation.