Drought impacts on the society and environment are influenced by how droughts propagate through the hydrologic cycle; however, the physical processes involved in drought propagation are not well understood. In this study, a physically based hydrologic model is used to understand the drought propagation mechanisms and their controlling factors in multiple watersheds selected from different regions of the contiguous United States (CONUS). The characteristics of hydrologic droughts are found to be significantly different in three regions of the CONUS: (1) western U.S. watersheds have long and intense streamflow droughts, (2) Great Plains and southwest U.S. watersheds have low intensity and duration of streamflow droughts, and (3) eastern U.S. watersheds have short but intense streamflow droughts. This spatial pattern of hydrologic drought characteristics is found to coincide with the pattern of climate properties. Highly seasonal recharge driven by winter precipitation or snowmelt leads to longer streamflow droughts in the western United States; whereas humid climate with low seasonality in the eastern United States leads to shorter streamflow droughts. Furthermore, the storage‐discharge relationship is identified as a key watershed property which controls the intensity of hydrologic droughts. Higher sensitivity of baseflow to watershed storage in the western and the eastern U.S. watersheds leads to more intense streamflow droughts in these regions. In the Great Plains and southwest United States, watersheds have a lower sensitivity of baseflow to catchment storage which, combined with the highly arid climate, leads to low variability in baseflow, and in turn results in low intensity of streamflow droughts in the region.