For monitoring hydrological events characterized by high spatial and temporal variability, the number and location of recording stations must be carefully selected to ensure that the necessary information is collected. Depending on the characteristics of each natural process, certain stations may be spurious or redundant, whereas others may provide most of the relevant data. With the objective of reducing the costs of the monitoring system and, at the same time, improving its operational effectiveness, three procedures were applied to identify the minimum network of rain gauge stations able to capture the characteristics of droughts in mainland Portugal. Drought severity is characterized by the standardized precipitation index applied to the timescales of 1, 3, 6 and 12 consecutive months. The three techniques used to reduce the dimensionality of the network of rain gauges were as follows: (i) artificial neural networks with sensitivity analysis, (ii) application of the mutual information criterion and (iii) K-means cluster analysis using Euclidean distances. The results demonstrated that the best dimensionality reduction method was case dependent in the three regions of Portugal (northern, central and southern) previously identified by cluster analysis. All the reduction techniques lead to the selection of a subset of rain gauges capable of reproducing the original temporal patterns of drought. For specific severe drought events in Portugal in the past, the comparison between drought spatial patterns obtained with the original stations and the selected subset indicated that the subset produced statistically satisfactory results (correlation coefficients higher than 0.6 and efficiency coefficients higher than 0.5). Copyright © 2012 John Wiley & Sons, Ltd.