Drought is an intermittent disturbance of the water cycle that profoundly affects the terrestrial carbon cycle. However, the response of the coupled water and carbon cycles to drought and the underlying mechanisms remain unclear. Here we provide the first global synthesis of the drought effect on ecosystem water use efficiency (WUE = gross primary production (GPP)/evapotranspiration (ET)). Using two observational WUE datasets (i.e., eddy-covariance measurements at 95 sites (526 site-years) and global gridded diagnostic modelling based on existing observation and a data-adaptive machine learning approach), we find a contrasting response of WUE to drought between arid (WUE increases with drought) and semi-arid/sub-humid ecosystems (WUE decreases with drought), which is attributed to different sensitivities of ecosystem processes to changes in hydro-climatic conditions. WUE variability in arid ecosystems is primarily controlled by physical processes (i.e., evaporation), whereas WUE variability in semi-arid/sub-humid regions is mostly regulated by biological processes (i.e., assimilation). We also find that shifts in hydro-climatic conditions over years would intensify the drought effect on WUE. Our findings suggest that future drought events, when coupled with an increase in climate variability, will bring further threats to semi-arid/sub-humid ecosystems and potentially result in biome reorganization, starting with low-productivity and high water-sensitivity grassland.