This research investigates forecast skill in predicting the onset and severity of drought in the Susquehanna River Basin. Streamflow forecasts developed by the National Oceanic and Atmospheric Administration’s (NOAA’s) Mid-Atlantic River Forecast Center (MARFC) are incorporated with other key drought indices in an aggregate drought index to predict and classify drought severity and to trigger drought mitigation actions. Climate drought index parameters for the Susquehanna River Basin, such as the Standardized Precipitation Index (SPI), Days of Storage Remaining Index (DSR), and Palmer Drought Severity Index (PDSI), are evaluated by their ability to detect water supply droughts of record. Drought indicators and streamflow forecasts are evaluated in the Drought Action Response Tool (DART), a systems model created specifically for this research. The value of drought indices constructed by combining system and climate status parameters with streamflow forecasts is demonstrated through a case study on the City of Baltimore water supply. Early warning skill improves using the aggregate indices, providing two advantages to the systems under study: 1) maintaining higher reservoir storage in Baltimore’s system that results in improved water quality and 2) Baltimore’s peak water demands from the Susquehanna River will decrease during low-flow conditions with improved timing to supplemental usage during drought conditions. A drought measure, Days of Supply Remaining (DSR), constructed from MARFC forecasts with reservoir storage and demand estimations is recommended for incorporation into the City of Baltimore’s Drought Management Plan, to facilitate proactive drought response and increased system performance.