As the climate changes, drought may reduce tree productivity and survival across many forest ecosystems; however, the relative influence of specific climate parameters on forest decline is poorly understood. We derive a forest drought-stress index (FDSI) for the southwestern United States using a comprehensive tree-ring data set representing AD 1000-2007. The FDSI is approximately equally influenced by the warm-season vapour-pressure deficit (largely controlled by temperature) and cold-season precipitation, together explaining 82% of the FDSI variability. Correspondence between the FDSI and measures of forest productivity, mortality, bark-beetle outbreak and wildfire validate the FDSI as a holistic forest-vigour indicator. If the vapour-pressure deficit continues increasing as projected by climate models, the mean forest drought-stress by the 2050s will exceed that of the most severe droughts in the past 1,000 years. Collectively, the results foreshadow twenty-first-century changes in forest structures and compositions, with transition of forests in the southwestern United States, and perhaps water-limited forests globally, towards distributions unfamiliar to modern civilization.