The ability to accurately predict ecosystem drought response and recovery is necessary to produce reliable forecasts of land carbon uptake and future climate. Using a suite of models from the Multi-scale Synthesis and Terrestrial Model Intercomparison Project (MsTMIP), we assessed modeled net primary productivity (NPP) response to, and recovery from, drought events against a benchmark derived from tree ring observations between 1948 and 2008 across forested regions of the US and Europe. We find short lag times (0–6 months) between climate anomalies and modeled NPP response. Although models accurately simulate the direction of drought legacy effects (i.e. NPP decreases), projected effects are approximately four times shorter and four times weaker than observations suggest. This discrepancy between observed and simulated vegetation recovery from drought reveals a potential critical model deficiency. Since productivity is a crucial component of the land carbon balance, models that underestimate drought recovery time could overestimate predictions of future land carbon sink strength and, consequently, underestimate forecasts of atmospheric CO₂.