Drought risks pose serious threats to socio-ecological systems, built environments, livelihoods and human wellbeing. Managing these risks requires long-term collaboration between diverse groups with different values, interests and forms of knowledge. Funders, researchers and practitioners have increasingly advocated for collaborative models of knowledge production in which all participants recognise the multiple ways of understanding drought risk and strive to co-create knowledge for decision making. Such transdisciplinary research approaches aim to develop and sustain more equitable and meaningful interactions between scientific and societal actors, and have been shown to increase knowledge use and build resilience to climate variability. In practice, however, collaborations around drought remain largely science-driven and, as a result, can struggle to produce actionable knowledge necessary to better manage drought risk. This article draws from drought studies and related transdisciplinary fields to highlight common barriers inhibiting actionable knowledge production across a broad range of drought risk management contexts. We also propose opportunities for improved knowledge production that can guide researchers, practitioners and funders seeking to engage in transdisciplinary work. Diverse understandings of drought risk have hindered widespread advances in knowledge production and resilience building. We argue for multi-disciplinary researchers to come together with stakeholders and focus on creating inclusive and context-driven environments. While not appropriate or cost-effective in all situations, co-production between researchers, practitioners and other stakeholder groups offers opportunities for actionable management plans and policies that reflect the complex and contested problem framings and socio-ecological contexts in which droughts impact society.