Droughts are intensifying worldwide, reorganizing ecosystems and threatening biodiversity and human health. Yet their effects on infectious diseases are poorly understood and sometimes paradoxical, with water limitation often amplifying water-associated infections. This complexity arises because drought not only reduces water availability but also restructures the host-pathogen interactions that govern transmission. Synthesizing theory and empirical evidence from water-associated diseases, we identify three ecological mechanisms through which drought modifies infection dynamics: concentrating organisms into shrinking refugia, selectively favoring drought-tolerant hosts, vectors, and pathogens, and amplifying transmission heterogeneity across landscapes. By linking hydrological change to core epidemiological and ecological processes, this framework highlights parasite traits and strategies likely to be favored during drought while providing a foundation for forecasting infections in a water-limited world.