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Water resources management is a complex task. It requires accurate prediction of inflow to reservoirs for the optimal management of surface resources, especially in arid and semi-arid regions. It is in particular complicated by droughts. Markov chain models have provided valuable information on drought or moisture conditions. A complementary method, however, is required that can both evaluate the accuracy of the Markov chain models for predicted drought conditions, and forecast the values for ensuing months. To that end, this study draws on Artificial Neural Networks (ANNs) as a data-driven model. The employed ANNs were trained and tested by means of a statistically-based input selection procedure to accurately predict reservoir inflow and consequently drought conditions. Thirty three years’ data of inflow volume on a monthly time resolution were selected to enable calculation of the standardized streamflow index (SSI) for the Markov chain model. Availability of hydro-climatic data from the Doroodzan reservoir in the Fars province, Iran, allowed us to develop a reservoir specific ANN model. Results demonstrated that both models accurately predicted drought conditions, by employing a randomization procedure that facilitated the selection of the required data for the ANN to forecast reservoir inflow close to the observed values over a validation period. The results confirmed that combining the two models improved short-term prediction reliability. This was in contrast to single model applications that resulted into substantial uncertainty. This research emphasized the importance of the correct selection of data or data mining, prior to entering a specific modeling routine.