Governments, aid organizations and researchers are struggling with the complexity of detecting and monitoring drought events, which leads to weaknesses regarding the translation of early warnings into action. Embedded in an advanced decision-support framework for Doctors without Borders (Médecins sans Frontières), this study focuses on identifying the added-value of combining different satellite-derived datasets for drought monitoring and forecasting in Ethiopia. The core of the study is the improvement of an existing drought index via methodical adaptations and the integration of various satellite-derived datasets. The resulting Enhanced Combined Drought Index (ECDI) links four input datasets (rainfall, soil moisture, land surface temperature and vegetation status). The respective weight of each input dataset is calculated for every grid point at a spatial resolution of 0.25 degrees (roughly 28 kilometers). In the case of data gaps in one input dataset, the weights are automatically redistributed to other available variables. Ranking the years 1992 to 2014 according to the ECDI-based warning levels allows for the identification of all large-scale drought events in Ethiopia. Our results also indicate a good match between the ECDI-based drought warning levels and reported drought impacts for both the start and the end of the season.