Drought is one of the most destructive natural disasters causing serious damages to human society, and studies have projected more severe and widespread droughts in the coming decades associated with the warming climate. Although several drought indices have been developed for drought monitoring, most of them were based on large scale environmental conditions rather than ecosystem transitional patterns to drought. Here, we propose using the ecosystem function oriented Normalized Ecosystem Drought Index (NEDI) to quantify drought severity, loosely related to Sprengel’s and Liebig’s Law of the Minimum for plant nutrition. Extensive eddy covariance measurements from 60 AmeriFlux sites across 8 IGBP vegetation types were used to validate the use of NEDI. The results show that NEDI can reasonably capture ecosystem transitional responses to limited water availability, suggesting that drought conditions detected by NEDI are ecosystem function oriented. The wildly used Palmer Drought Severity Index (PDSI), on the other hand, does not have a clear relationship with ecosystem responses to drought conditions because ecosystem adaptation ability is not considered in PDSI calculation.