The impacts of drought and climate change on sectors such as agriculture and forestry are much more well known than impacts on urban areas. Yet, direct climatic impacts on cities affect many people, much property, and other values. Economies of urban areas are also affected because of strong linkages with agriculture, forestry, tourism, and other climate sensitive sectors. This paper explores the nature of drought and climate change impacts on towns and cities in the Canadian Prairie Provinces. We begin an assessment of urban vulnerability to climate change and the expected increases in severity and frequency of drought. Past and future changes in the climate of the Prairie Provinces are discussed, with emphasis on the hydrological cycle. Past trends to drier summer conditions have occurred in the grassland region of Saskatchewan and Manitoba. Trends to wetter conditions are documented elsewhere in the Prairies. Future summer drying trends are expected for mid-continental regions of North America. Continued increases in the length of the warm season and in temperatures translate into increases in evaporative demand, thus potentially reducing water availability and increasing water demand. Water supplies are adversely affected by droughts, and this situation will likely increase with continued warming. Case studies of recent past droughts, such as those of 1987-1988 and of 2001-2002, are useful in assessing both sensitivity to climate and ability to adapt. Appropriate adaptation strategies for city operations and planning, as well as for residents are required, especially for sequences of drought years.