Soil water is a major requirement for biomass production and, therefore, one of the most important factors for agriculture productivity. As agricultural droughts are related to declining soil moisture, this paper examines soil moisture drought in the transboundary Koshi River basin (KRB) in the central Himalayan region. By applying the J2000 hydrological model, daily spatially distributed soil moisture is derived for the entire basin over a 28-year period (1980–2007). A multi-site and multi-variable approach – streamflow data at one station and evapotranspiration data at three stations – was used for the calibration and validation of the J2000 model. In order to identify drought conditions based on the simulated soil moisture, the soil moisture deficit index (SMDI) was then calculated, considering the derivation of actual soil moisture from long-term soil moisture on a weekly timescale. To spatially subdivide the variations in soil moisture, the river basin is partitioned into three distinct geographical regions, namely trans-Himalaya, the mountains, and the plains. Further, the SMDI is aggregated temporally to four seasons – winter, pre-monsoon, monsoon, and post-monsoon – based on wetness and dryness patterns observed in the study area. This has enabled us to look at the magnitude, extent, and duration of soil moisture drought. The results indicated that the J2000 model can simulate the hydrological processes of the basin with good accuracy. Considerable variation in soil moisture was observed in the three physiographic regions and across the four seasons due to high variation in precipitation and temperature conditions. The year 1992 was the driest year and 1998 was the wettest at the basin scale in both magnitude and duration. Similarly, the year 1992 also has the highest number of weeks under drought. Comparing the SMDI with the standardised precipitation index (SPI) suggested that SMDI can reflect a higher variation in drought conditions than SPI. Our results suggested that both the occurrence and severity of droughts have increased in the Koshi River basin over the last 3 decades, especially in the winter and pre-monsoon seasons. The insights provided into the frequency, spatial coverage, and severity of drought conditions can provide valuable contributions towards an improved management of water resources and greater agricultural productivity in the region.