We developed an annual tree-ring δ18O chronology from Larix sibirica in the eastern Tianshan Mountains of northwestern China. Climatic response revealed that tree-ring δ18O was significantly positively correlated with the mean and maximum July–August temperatures, whereas the July precipitation and relative humidity were significantly negatively correlated with tree-ring δ18O. The self-calibrating Palmer drought severity index (sc_PDSI) in July–August was significantly correlated with the tree-ring δ18O, which reflects the comprehensive effects of the three parameters on tree-ring δ18O fractionation. We established a robust reconstruction of July–August sc_PDSI that accounted for 38.4% of the total variance of sc_PDSI from 1959 to 2008. The sc_PDSI reconstruction yields new insights on past drought that were not previously realized in other PDSI reconstructions (e.g. Monsoon Asia Drought Atlas) from the region. The reconstruction revealed several wet and dry periods but no trend towards a wetter climate in the eastern Tianshan Mountains during the last two decades. It also detected synergistic effects of the North Atlantic Oscillation and the El Niño-Southern Oscillation on regional moisture conditions as a result of teleconnections between tropical oceans and mid-latitude circulation patterns.