Abstract: Hexi is a typical irrigation agricultural area, it is impossible to grow crops based on the natural precipitation, which is only 100-150 mm every year on average. The runoff of inland river is the main water resource for agriculture. That means the high/low runoff is the main determination of dry/wet condition in the target area. Therefore, runoff is considered as the variable to define a Z-index in order to monitor the drought in Hexi irrigation area. Being the Palmer drought severity index-PDSI has been widely applied in the world since the 1960s. In addition, the PDSI is also widely used in drought assessment, comparison and its spatial/temporal distributions analysis. So PDSI is selected to compare with the runoff-denoted Z index in the drought monitoring in Hexi area.The monthly runoff data from hydrological representative station, the tilth area and the meteorological data from representative station of inland river in Hexi area are utilized. A runoff-denoted drought index, the runoff-denoted Z index is established by processing runoff normally. Dry and wet grades are also divided using this index. Considering the relationship between the dry/wet grades and the actual situation of agricultural irrigation, the irrigation grades of Z index are obtained. The precipitation is derived from runoff to revise the Palmer drought severity index. In addition, Penman method is adopted replacing the Thornthwaite method to improve the potential evaporation calculating scheme. Results show that drought monitoring is improved when the runoff is calculated in Palmer drought severity index and the calculation method of potential evaporation is changed. Based on the drought events in Hexi area, the monitoring effect of the Z index is better than the Palmer drought severity index. So it can be concluded that the drought monitored by the runoff-denoted Z index is closer to the actual status in Hexi irrigation area.