The present study was a qualitative investigation of the impact of drought on rural families of southern New South Wales, Australia, with particular emphasis on the concept of resilience in times of stress. The aim was to provide insight, from a psychological perspective, into the experiences of rural farmers in a time of adversity, and to identify the coping resources utilized by these farming families. Participants were 11 members of five families from Blighty, a small farming town in the Riverina district, experiencing drought and decreased water allocation to their local area. Family members were interviewed on two separate occasions at their farms. Analysis of interview transcripts revealed that a wide range of coping strategies were being utilized by these families from problem-focussed coping, optimism and positive appraisal to less adaptive strategies such as cognitive dissonance, denial and avoidance of negative social influences. A significant finding was the discovery of a range of collective coping strategies used by the families in this study and the reliance on social capital as an adaptive resource. There were signs, however, that social cohesion of this community had become compromised due to competition for resources. The adaptive coping mechanisms traditionally employed by these farming families are starting to weaken and urgent work to enhance the individual coping strategies of farmers is needed. Furthermore, Government needs to recognise the importance of social capital as a coping resource that will enable farming families to adapt and survive drought conditions into the future. Providing financial assistance to support current community initiatives and collective coping strategies may prove more beneficial to farmers than allocating inadequate amounts offunding to individual farming families.