Streamflow of the Colorado River Basin is the most over-allocated in the world. Recent assessment indicates that demand for this renewable resource will soon outstrip supply, suggesting that limited groundwater reserves will play an increasingly important role in meeting future water needs. Here we analyze nine years (December 2004 to November 2013) of observations from NASA's GRACE mission and find that during this period of sustained drought, groundwater accounted for 50.1 km3 of the total 64.8 km3 of freshwater loss. The rapid rate of depletion of groundwater storage (−5.6 ± 0.4 km3 yr−1) far exceeded the rate of depletion of Lakes Powell and Mead. Results indicate that groundwater may comprise a far greater fraction of Basin water use than previously recognized, in particular during drought, and that its disappearance may threaten the long-term ability to meet future allocations to the seven Basin states.