Terrestrial water storage (TWS) modulates the hydrological cycle and is a key determinant of water availability and an indicator of drought. While historical TWS variations have been increasingly studied, future changes in TWS and the linkages to droughts remain unexamined. Here, using ensemble hydrological simulations, we show that climate change could reduce TWS in many regions, especially those in the Southern Hemisphere. Strong inter-ensemble agreement indicates high confidence in the projected changes that are driven primarily by climate forcing rather than land and water management activities. Declines in TWS translate to increases in future droughts. By the late twenty-first century, the global land area and population in extreme-to-exceptional TWS drought could more than double, each increasing from 3% during 1976-2005 to 7% and 8%, respectively. Our findings highlight the importance of climate change mitigation to avoid adverse TWS impacts and increased droughts, and the need for improved water resource management and adaptation.