Climate change is likely to increase droughts. The vulnerability of cities to droughts is increasing worldwide. Policy responses from cities to droughts lack consideration of long-term climatic and socio-economic scenarios, and focus on short-term emergency actions that disregard sustainability in the connected regional and river basin systems. We aim to explore the dynamics of the water-energy-land nexus in urban systems suffering increased climate change-related droughts, and their implications for sustainability. We complement a case study with a literature review providing cross-regional insights, and detail pervasive knowledge, policy and ambition gaps in the interaction between cities and droughts. We show that water availability with low emissions, without compromising ecosystems and with low costs to society, poses a local-scale limit to sustainable urban growth, a new concept delineating the limits to growth in cities. We conclude that urban and river basin planners need to institutionalize transparency and cross-sectoral integration in multi-sector partnerships, to consider long-term land use planning together with water and energy, and to apply integrated climate services to cities. Our study reveals the importance of including land, water and energy in long-term urban planning, and to connect them with the county, region, river basin and global scales.