Crop production in the tropics is subject to considerable climate variability caused by the El Nino-Southern Oscillation (ENSO) phenomenon. In Southeast Asia, El Niño causes comparatively dry conditions leading to substantial declines of crop yields. In concert with global warming, the frequency and severity of the phenomenon are likely to increase during the 21st century. Little is known about the impact of ENSO-related drought on the welfare of farm households in developing countries. This paper seeks to contribute to closing this knowledge gap with a case study from Central Sulawesi, Indonesia. Its objective is to measure household resilience towards drought periods and identify its influencing factors to deduce policy implications. Using consumption-related indicators, we develop an index measuring household drought resilience; we then identify its determinants applying an asset-based livelihood framework encompassing the household-specific level of technical efficiency in agricultural production. Most of the drought-affected farm households are forced to substantially reduce expenditures for basic necessities, whereby the drastic cuts in food expenditures are particularly alarming. Households' drought resilience is strengthened by the possession of liquid assets, access to credit, and a high level of technical efficiency in crop production. The results suggest a number of policy recommendations, namely the improvement of the farmers' access to ENSO forecasts, the provision of formal credit at moderate interest rates to facilitate consumption smoothing, and the intensification of agricultural extension efforts in view of low levels of technical efficiency found in agricultural production.