The majority of central Europe has a transitional climate type as a result of interactions between maritime and continental climates. This study focuses on the appearance and severity of drought in continental Croatia, which is part of the transitional climate area. It is situated between 15° E and 19° E. The altitude declines from west (167 m a.s.l) to east (88 m a.s.l.). The time period analysed is 1981–2018. Air temperature and precipitation data series from 13 meteorological stations were analysed. The analysis was done on an annual basis to define the spatio-temporal variability in air temperature and precipitation and their impact on drought episodes using the standardised evapotranspiration precipitation index. Different statistical methods (e.g., the nonparametric Mann–Kendall test and agglomerative hierarchical clustering) were used to examine the trend homogeneity of the analysed region. The analysis indicated inhomogeneity across the study area in terms of what significantly impacted the occurrence and severity of droughts. Drought occurrence is influenced more strongly by increasing trends in air temperature as compared with increasing or decreasing precipitation trends. The probability of severe drought occurrence was estimated using a copula function, and the results demonstrated that areas with higher precipitation could be more exposed to drought. Furthermore, the results demonstrated the impacts of specific regional characteristics on drought occurrence, severity, and duration, which indicates that small-scale research on droughts is more reliable.