Drought conditions prevailed over eastern Australia from 1937 to 1945. They first emerged at serious levels in 1937, with New South Wales, Victoria, much of Queensland and parts of Western Australia affected. Isolated parts of New South Wales, notably in the central west, suffered record low rainfall. In 1938 there was further deterioration in New South Wales and Victoria and it also spread to eastern South Australia and the south-west grain growing region of Western Australia where wheat yields plummeted to their lowest level since 1914.

In Victoria, a very dry six month period provided the right conditions for the disastrous Black Friday bushfires in January 1939. Heavy rain fell in late February 1939 over Victoria, South Australia and New South Wales, and for the remainder of the year, abundant rain fell over eastern and central Australia. However dry weather occurred again and 1940 was one of the driest years of the century over most of the southern parts of the country. Dams were empty in New South Wales and Brisbane had water restrictions. January 1941 saw rain again, but by the second half of that year was again very dry. The following 12 months were good for general rain, but again dry conditions returned in 1943 and were worse again in 1944 when a failure of the wheat crop occurred in several places. The drought continued into 1945 and large rivers such as the Hunter were virtually dry. By April 1945 most Victorian water storage facilities were empty, the Murray river ceased flowing at Echuca and Adelaide faced water shortages.

Financial losses were severe during this drought. The number of sheep that died in 1945 alone was 10 million in New South Wales. In 1946 Queensland financial losses caused by the drought were estimated at £25 million. Approximately four million sheep died in South Australia over 1944 and 1945.

The drought finally ended in the southern states during the winter of 1945 but continued into 1946 in northern New South Wales and southern Queensland. In 1947 significant rainfall ended the long drought.