Identifying the thresholds of drought that, if crossed, suppress vegetation functioning is vital for accurate quantification of how land ecosystems respond to climate variability and change. We present a globally applicable framework to identify drought thresholds for vegetation responses to different levels of known soil-moisture deficits using four remotely sensed vegetation proxies spanning 2001–2018. The thresholds identified represent critical inflection points for changing vegetation responses from highly resistant to highly vulnerable in response to drought stress, and as a warning signal for substantial vegetation impacts. Drought thresholds varied geographically, with much lower percentiles of soil-moisture anomalies in vegetated areas covered by more forests, corresponding to a comparably stronger capacity to mitigate soil water deficit stress in forested ecosystems. Generally, those lower thresholds are detected in more humid climates. State-of-the-art land models, however, overestimated thresholds of soil moisture (i.e. overestimating drought impacts), especially in more humid areas with higher forest covers and arid areas with few forest covers. Based on climate model projections, we predict that the risk of vegetation damage will increase by the end of the twenty-first century in some hotspots like East Asia, Europe, Amazon, southern Australia and eastern and southern Africa. Our data-based results will inform projections on future drought impacts on terrestrial ecosystems and provide an effective tool for drought management.