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Abstract Drylands are critical in regulating global carbon sequestration, but the resiliency of these semi‐arid shrub, grassland and forest systems is under threat from global warming and intensifying water stress. We used synergistic satellite optical‐Infrared (IR) and microwave remote sensing observations to quantify plant‐to‐stand level vegetation water potentials and seasonal changes in dryland water stress in the southwestern U.S. Machine‐learning was employed to re‐construct global satellite microwave vegetation optical depth (VOD) retrievals to 500‐m resolution. The re‐constructed results were able to delineate diverse vegetation conditions undetectable from the original 25‐km VOD record, and showed overall favorable correspondence with in situ plant water potential measurements (R from 0.60 to 0.78). The VOD water potential estimates effectively tracked plant water storage changes from hydro‐climate variability over diverse sub‐regions. The re‐constructed VOD record improves satellite capabilities for monitoring the storage and movement of water across the soil‐vegetation‐atmosphere continuum in heterogeneous drylands.