The conditions of the 2007-2008 drought in Ilam Province, Iran, are inspected using the Standard Precipitation Index (SPI). The impacts of the drought on water resources of Ilam Province are evaluated. The data from climatology stations, hydrometric stations and groundwater observation stations were used in the analysis. The results showed that the drought intensity increased from southwest to northeast in the Province. This trend is the result of air masses originating from the Mediterranean area, which is situated west and southwest of the area, and the influence of the Zagros Mountain ranges. These mountains have a northwest southeast trend and the moisture content of the air masses is reduced by the rainshadow effect. This drought decreased river discharges significantly and lowered the water table of alluvial aquifers.