Abstract: Winter wheat is a major grain crop in Gansu Province, where precipitation is the most limiting factor for winter wheat production. The uneven space-time distribution of precipitation results in perennial winter wheat drought in Gansu Province. It is therefore practically important to accurately monitor drought and quantitatively evaluate disaster losses of winter wheat in Gansu Province. This can provide the needed scientific basis for decision-making departments to formulate agricultural disaster prevention and mitigation measures towards regional food security. In this study, we collected data on soil water content and winter wheat growth conditions in three agronomic observatory stations. Data were also collected on meteorological conditions, yield and drought disaster in 38 winter wheat growing counties for the period 1981-2014. Based on soil water storage during fallow period and on water budget for winter wheat development stage, crop water budget index was revised. There was a high correlation among crop water budget index and soil water storage, yield factors and losses. Therefore, it objectively, accurately and quantitatively reflected the impact of drought on winter wheat yield in Gansu Province. A yield-factor assessment model and a yield-loss assessment model were developed in the study based on the revised water budget index. The results showed that while the yield-factor assessment model passed 0.01 test of significance, and much of the yield-loss assessment model passed 0.05 test of significance. The assed and measured values of winter wheat yield factors passed F-test (P < 0.01). The validation results of the yield loss assessment model showed that 68.4% of wheat growing counties passed F-test (P < 0.05), which more accurately assessed the loss due to drought in Gansu Province. The revised crop water budget index objectively reflected the drought of winter wheat in Gansu Province and the established assessment model accurately estimated the loss due to drought, which provided a reliable reference for application.