Vegetation response to flooding across large dryland areas such as Australia’s Murray Darling Basin (MDB) is not understood synoptically and with locally relevant detail. We filled this knowledge gap by quantifying vegetation dynamics, defined here as greening and browning due to changing chlorophyll content and leaf area index, in response to flooding and rainfall across the floodplains of the entire MDB. We quantified vegetation and flooding dynamics using the same data source, namely 26 years of high resolution, wall-to-wall satellite data, in a top down statistical modeling approach, where we controlled for rainfall. Our time series (1986–2011) covered a period of extreme hydroclimatic variability, including the South East Australian Millennium Drought, thus providing a research opportunity to investigate how the relationship between vegetation and flooding changed during wet and dry periods. Our results showed that besides rainfall, flooding plays a key role in driving floodplain vegetation dynamics, yet the role of flooding varied across the MDB floodplains. We quantified a change in the relationship of how vegetation responds to rainfall and flooding with an unprecedented level of spatial detail. The change in the relationships coincided primarily with the onset of the Millennium Drought, yet local and regional differences in the timing of the change did occur, suggesting that the beginning of the Millennium Drought did not impact all floodplain areas at the same time. Our synoptic while locally relevant quantification of the changing response of vegetation to rainfall and flooding is a first step to help underpin Australia’s investment into environmental water allocations.