Increases in water consumption in agriculture, tourism and industry have exacerbated the problem of water resources management in Iberia, and the transboundary character of many of its rivers adds to the problem. Drought has caused water restrictions, destruction of crops, livestock deaths and widespread forest fires in Iberia in recent years. The aim of this PhD is to undertake an impact assessment of climate change on the water resources of the rivers Douro, Tagus and Guadiana, with a special emphasis on the vulnerability of Portugal (the downstream country). Observed and projected changes in rainfall were assessed, as were future projections for drought and discharges. A dataset of downscaled and bias corrected rainfall and temperature (and subsequently potential evapotranspiration) from CMIP5 climate models (RCP8.5) was created using two different methods: change factor and quantile mapping. From the CMIP5 ensemble, fifteen model runs were chosen to represent the range of future climate projections available. To assess changes in future rainfall, a 30 year time‐slice approach was compared with a transient approach. Two drought indices (DSI‐12 and SPI‐12) were used to assess drought evolution from 1961 to 2100. A spatially distributed, physically based hydrological modelling system (SHETRAN) was used to provide historical and future (2050s) natural discharges. A minimal calibration approach was followed using small quasi‐natural sub‐basins. The majority of climate models projected reductions of annual rainfall in the three basins for the 2050s (for both downscaling methods) and almost all models projected rainfall decreases in spring and autumn. None of the models projected positive annual rainfall trends (1961‐ 2100) and in spring, summer and autumn the majority of models showed negative trends. The 15 climate models display a wide range of future drought projections: some showed litle or no change while others project decades of extreme drought conditions. It was also shown that SPI‐12 is not an appropriate index to use in Iberian climates. Most models project decreases in daily, seasonal and annual discharges for all basins, although some models project increases in high discharges. The magnitude of the decreases in discharge varies significantly for the different climate models throughout the seasons and basins. However, the Guadiana consistently shows the larger reductions in discharge and the higher probabilities of falling below the discharge limits set in the international agreement between Portugal and Spain.