Lower Mekong Basin (LMB) experiences a recurrent drought phenomenon. However, few studies have focused on drought monitoring in this region due to lack of ground observations. The newly released Climate Hazards Group Infrared Precipitation with Station data (CHIRPS) with a long-term record and high resolution has a great potential for drought monitoring. Based on the assessment of CHIRPS for capturing precipitation and monitoring drought, this study aims to evaluate the drought condition in LMB by using satellite-based CHIRPS from January 1981 to July 2016. The Standardized Precipitation Index (SPI) at various time scales (1–12-month) is computed to identify and describe drought events. Results suggest that CHIRPS can properly capture the drought characteristics at various time scales with the best performance at three-month time scale. Based on high-resolution long-term CHIRPS, it is found that LMB experienced four severe droughts during the last three decades with the longest one in 1991–1994 for 38 months and the driest one in 2015–2016 with drought affected area up to 75.6%. Droughts tend to occur over the north and south part of LMB with higher frequency, and Mekong Delta seems to experience more long-term and extreme drought events. Severe droughts have significant impacts on vegetation condition.