Cotton producers in the Mid-South and southeastern regions of the U.S. have two approaches to manage drought stress: irrigate or plant drought-tolerant cultivars. Still, timing irrigations and defining the amount to be applied have been challenging in humid regions. Additionally, little information is available on varietal drought tolerance. An index capable of quantifying drought stress at a given location could be used to compile yield responses across variety trials to give robust insight into varietal drought tolerance and define irrigation thresholds for irrigated fields or provide information required to better place varieties in dryland scenarios, thereby increasing the water-use efficiency and sustainability of the production system. The objectives of this review are to cover past research conducted on developing drought-stress indices, examine the potential of soil moisture measurements to provide insight into cotton water status, and highlight cotton-specific data that likely will be used to construct a drought-stress index capable of providing insight into cotton water status. Although multiple approaches have been taken, each relies on some measure of drought stress coupled with susceptibility of the crop to the stress at a given point in the season. From this review, it is clear that new advancements in sensor technology and a better understanding of cotton’s susceptibility to drought stress should support the development of a more accurate, reliable drought-stress index capable of providing insight into varietal drought tolerance and driving irrigations.