To increase drought preparedness in semi-arid regions many small and medium reservoirs have been built in recent decades. Together these reservoirs form a Dense Reservoir Network (DRN) and its presence generates numerous challenges for water management. Most of the reservoirs that constitute the network are unmonitored and unregistered, posing questions on their cumulative effects on strategic reservoirs and water distribution at watershed scale. Their influence on hydrological drought propagation is thus largely unexplored. The objective of this study is then to assess the DRN effects on droughts both in time and space. This study utilized a mesoscale semi-distributed hydrological model to reproduce the DRN in a large-scale tropical semiarid watershed (19,530 km²), which presents both a network of large strategic reservoirs and a DRN. To investigate the effects in time and space generated by the network’s presence, the differences between multiple network scenarios were analyzed. Results show that the presence of the DRN accelerates the transition from meteorological to hydrological drought phases by 20% on average and slows down the recharge in strategic reservoirs by 25%, leading to a 12% increase of periods in hydrological drought conditions in a highly strategic basin and 26% without strategic reservoirs. In space, the DRN shifts upstream the basin’s water storage capacity by 8%, but when both large and small reservoirs are present the stored volume distribution behavior is not straightforward. The findings confirm the need to consider small reservoirs when addressing drought management policies at regional scale.