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© 2015 IOP Publishing Ltd. Agricultural production across eastern Australia and New Zealand is highly vulnerable to drought, but there is a dearth of observational drought information prior to CE 1850. Using a comprehensive network of 176 drought-sensitive tree-ring chronologies and one coral series, we report the first Southern Hemisphere gridded drought atlas extending back to CE 1500. The austral summer (December-February) Palmer drought sensitivity index reconstruction accurately reproduces historically documented drought events associated with the first European settlement of Australia in CE 1788, and the leading principal component explains over 50% of the underlying variance. This leading mode of variability is strongly related to the Interdecadal Pacific Oscillation tripole index (IPO), with a strong and robust antiphase correlation between (1) eastern Australia and the New Zealand North Island and (2) the South Island. Reported positive, negative, and neutral phases of the IPO are consistently reconstructed by the drought atlas although the relationship since CE 1976 appears to have weakened.