Information on regional drought characteristics provides critical information for adequate water resource management. This study introduces a method to calculate the probability of a specific area to be affected by a drought of a given severity and demonstrates its potential for calculating both meteorological and hydrological drought characteristics. The method is demonstrated using Denmark as a case study. The calculation procedure was applied to monthly precipitation and streamflow series separately, which were linearly transformed by the Empirical Orthogonal Functions (EOF) method. Denmark was divided into 260 grid-cells of 14×17 km, and the monthly mean and the EOF-weight coefficients were interpolated by kriging. The frequency distributions of the first two (streamflow) or three (precipitation) amplitude functions were then derived. By performing Monte Carlo simulations, amplitude functions corresponding to 1000 years of data were generated. Based on these simulated functions as well as interpolated mean and weight coefficients, long time series of precipitation and streamflow were simulated for each grid-cell. The probability distribution functions of the area covered by a drought and the drought deficit volumes were then derived and combined to produce drought severity–area–frequency curves. These curves allowed an estimation of the probability of an area of a certain extent to have a drought of a given severity, and thereby return periods could be assigned to historical drought events. A comparison of drought characteristics showed that streamflow droughts are less homogeneous over the region, less frequent and last for longer time periods than precipitation droughts.