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Quantitative assessment of the terrestrial water storage (TWS) changes and the major driving factors have been hindered by the lack of direct observations in Inner Mongolia, China. In this study, the spatial and temporal changes of TWS and groundwater storage (GWS) in Inner Mongolia during 2003–2021 were evaluated using the satellite gravity data from the Gravity Recovery and Climate Experiment (GRACE) and the GRACE Follow On combined with data from land surface models. The results indicated that Inner Mongolia has experienced a widespread TWS loss of approximately 1.82 mm/yr from 2003–2021, with a more severe depletion rate of 4.15 mm/yr for GWS. Meteorological factors were the driving factors for water storage changes in northeastern and western regions. The abundant precipitation increased TWS in northeast regions at 2.36 mm/yr. Anthropogenic activities (agricultural irrigation and coal mining) were the driving factors for water resource decline in the middle and eastern regions (especially in the agropastoral transitional zone), where the decrease rates were 4.09 mm/yr and 3.69 mm/yr, respectively. In addition, the severities of hydrological drought events were identified based on water storage deficits, with average severity values of 17 mm, 18 mm, 24 mm, and 33 mm for the west, middle, east, and northeast regions, respectively. This study established a basic framework for water resource changes in Inner Mongolia and provided a scientific foundation for further water resources investigation. [ABSTRACT FROM AUTHOR]