Drought in Australia has widespread impacts on agriculture and ecosystems. Satellite-based Fraction of Absorbed Photosynthetically Active Radiation (FAPAR) has great potential to monitor and assess drought impacts on vegetation greenness and health. Various FAPAR products based on satellite observations have been generated and made available to the public. However, differences remain among these datasets due to different retrieval methodologies and assumptions. The Quality Assurance for Essential Climate Variables (QA4ECV) project recently developed a quality assurance framework to provide understandable and traceable quality information for Essential Climate Variables (ECVs). The QA4ECV FAPAR is one of these ECVs. The aim of this study is to investigate the capability of QA4ECV FAPAR for drought monitoring in Australia. Through spatial and temporal comparison and correlation analysis with widely used Moderate Resolution Imaging Spectroradiometer (MODIS), Satellite Pour l’Observation de la Terre (SPOT)/PROBA-V FAPAR generated by Copernicus Global Land Service (CGLS), and the Standardized Precipitation Evapotranspiration Index (SPEI) drought index, as well as the European Space Agency’s Climate Change Initiative (ESA CCI) soil moisture, the study shows that the QA4ECV FAPAR can support agricultural drought monitoring and assessment in Australia. The traceable and reliable uncertainties associated with the QA4ECV FAPAR provide valuable information for applications that use the QA4ECV FAPAR dataset in the future.