As the main defoliators of coniferous forests in Shandong Province, China, pine caterpillars (including Dendrolimus suffuscus suffuscus Lajonquiere, D. spectabilis Butler, and D. tabulaeformis Tsai et Liu) have caused substantial forest damage, adverse economic impacts, and losses of ecosystem resources. Therefore, elucidating the effects of drought on the outbreak of these pests is important for promoting forestry production and ecological reconstruction. Accordingly, the aim of the present study was to analyse the spatiotemporal variation of drought in Shandong Province, using the Standard Precipitation Index, and to investigate the impact of drought on the outbreak of pine caterpillar infestations. Future trends in drought and pine caterpillar populations were then estimated using the Hurst exponent. The results showed that: (1) Drought decreased gradually and showed a wetting trend from 1981 to 2012, with frequency decreasing on a decadal scale as follows: 1980s > 1990s > 2000s > 2010s; (2) The total area of pine caterpillar occurrence decreased strongly from 1992 to 2012; (3) Long-term or prolonged drought had a greater positive impact on pine caterpillar outbreak than short-term drought; (4) In the future, a greater portion of the province’s area will experience increased wetting conditions (57%) than increased drought (43%), and the area of pine caterpillar outbreak is estimated to decrease overall. These findings help elucidate the relationship between drought and pine caterpillar outbreak in Shandong Province and, hence, provide a basis for developing preventive measures and plans.