Increased frequency and severity of drought, as a result of climate change, is expected to drive critical changes in plant–insect interactions that may elevate rates of tree mortality. The mechanisms that link water stress in plants to insect performance are not well understood. Here, we build on previous reviews and develop a framework that incorporates the severity and longevity of drought and captures the plant physiological adjustments that follow moderate and severe drought. Using this framework, we investigate in greater depth how insect performance responds to increasing drought severity for: (i ) different feeding guilds; (ii ) flush feeders and senescence feeders; (iii ) specialist and generalist insect herbivores; and (iv ) temperate versus tropical forest communities. We outline how intermittent and moderate drought can result in increases of carbon‐based and nitrogen‐based chemical defences, whereas long and severe drought events can result in decreases in plant secondary defence compounds. We predict that different herbivore feeding guilds will show different but predictable responses to drought events, with most feeding guilds being negatively affected by water stress, with the exception of wood borers and bark beetles during severe drought and sap‐sucking insects and leaf miners during moderate and intermittent drought. Time of feeding and host specificity are important considerations. Some insects, regardless of feeding guild, prefer to feed on younger tissues from leaf flush, whereas others are adapted to feed on senescing tissues of severely stressed trees. We argue that moderate water stress could benefit specialist insect herbivores, while generalists might prefer severe drought conditions. Current evidence suggests that insect outbreaks are shorter and more spatially restricted in tropical than in temperate forests. We suggest that future research on the impact of drought on insect communities should include (i ) assessing how drought‐induced changes in various plant traits, such as secondary compound concentrations and leaf water potential, affect herbivores; (ii ) food web implications for other insects and those that feed on them; and (iii ) interactions between the effects on insects of increasing drought and other forms of environmental change including rising temperatures and CO2 levels. There is a need for larger, temperate and tropical forest‐scale drought experiments to look at herbivorous insect responses and their role in tree death.