AbstractGlobal climate change is the major and most urgent global environmental issue. Australia is already experiencing climate change as evidenced by higher temperatures and more frequent and severe droughts. These impacts are compounded by increasing land use pressures on natural resources and native ecosystems. This paper provides a synthesis of the interactions, feedbacks and risks of natural climate variability, climate change and land use/land cover change (LUCC) impacting on the Australian continent and how they vary regionally. We review evidence of climate change and underlying processes resulting from interactions between global warming caused by increased concentration of atmospheric greenhouse gases and modification of the land surface. The consequences of ignoring the effect of LUCC on current and future droughts in Australia could have catastrophic consequences for the nation's environment, economy and communities. We highlight the need for more integrated, long‐term and adaptive policies and regional natural resource management strategies that restore the beneficial feedbacks between native vegetation cover and local‐regional climate, to help ameliorate the impact of global warming.