Hydro-climate variability significantly affects vegetation heath and the region's natural resilience to climate-induced disturbances, influenced by the basin's unique physical and geological characteristics. In arid and semi-arid landscapes, climate change compounds the disruption of hydrological cycles, worsening vegetation growth and placing considerable strain on ecosystems and agricultural resources. The present study investigates the natural resilience of the Luni River Basin in the face of climate change, which disrupts hydro balance and alters rainfall-runoff dynamics. Utilizing various vegetation, climatic and vegetation drought indices, this study assesses the vulnerability to drought conditions and vegetation stress using Remote sensing and Geographic Information System (GIS) techniques for the last two decades (2003 to 2023). Landsat 8 Operational Land Imager (OLI) imagery and Moderate Resolution Imaging Spectroradiometer satellite (MODIS) data has been used to monitor vegetation stress and drought in the LRB. The vegetation stress map categorizes the Luni River Basin into four distinct stress conditions-Very High, High, Moderate, and Low, where very high stress zones are found in the south-west, northern and western portions of LRB. 57.8% of the basin falls under moderate drought conditions, while 34.3% is experiencing mild drought conditions. The vegetation stress dataset achieved an overall accuracy of 86.96%, while the vegetation drought zone dataset attained the same accuracy of 83.3%. These insights are crucial for informing policymakers and stakeholders about targeted strategies like the selection of climate-resilient, water-efficient plantation practices, cost-effective water harvesting techniques and reducing overgrazing for managing vegetation drought risks in the region (LRB).