The frequent recent drought events in the Great Plains of United States have led to significant crop yield reductions and crop price surges. Using an integrated water-food-energy nexus modelling and optimization approach, this study laid the basis for developing an effective agricultural drought management system by combining real-time drought monitoring with real-time irrigation management. The proposed water-food-energy simulation and optimization method is spatially explicit and was applied to one major corn region in Nebraska. The crop simulations, validated with yield statistics, showed that a drought year like 2012 can potentially reduce the corn yield by 50% as compared to a wet year like 2009. The simulation results show that irrigation can play a key role in halting crop losses due to drought and in sustaining high yields of up to 20t/ha. Nevertheless, the water-food-energy relationship shows that significant investments on water and energy are required to limit the negative effects of drought. The multi-criteria optimization problem developed in this study shows that the optimal crop yield does not necessarily correspond to the maximum yield, resulting in potential water and energy savings.