The relative influences of Indian and Pacific Ocean modes of variability on Australian rainfall and soil moisture are investigated for seasonal, interannual, and decadal time scales. For the period 1900–2006, observations, reanalysis products, and hindcasts of soil moisture during the cool season (June–October) are used to assess the impacts of El Niño–Southern Oscillation (ENSO) and the Indian Ocean dipole (IOD) on southeastern Australia and the Murray–Darling Basin, two regions that have recently suffered severe droughts. A distinct asymmetry is found in the impacts of the opposite phases of both ENSO and IOD on Australian rainfall and soil moisture. There are significant differences between the dominant drivers of drought at interannual and decadal time scales. On interannual time scales, both ENSO and the IOD modify southeastern Australian soil moisture, with the driest (wettest) conditions over the southeast and more broadly over large parts of Australia occurring during years when an El Niño and a positive IOD event (La Niña and a negative IOD event) co-occur. The atmospheric circulation associated with these responses is discussed. Lower-frequency variability over southeastern Australia, however, including multiyear drought periods, seems to be more robustly related to Indian Ocean temperatures than Pacific conditions. The frequencies of both positive and negative IOD events are significantly different during periods of prolonged drought compared to extended periods of “normal” rainfall. In contrast, the frequency of ENSO events remains largely unchanged during prolonged dry and wet periods. For the Murray–Darling Basin, there appears to be a significant influence by La Niña and both positive and negative IOD events. In particular, La Niña plays a much more prominent role than for more southern regions, especially on interannual time scales and during prolonged wet periods. For prolonged dry (wet) periods, positive IOD events also occur in unusually high (low) numbers.