It is crucial to investigate how a precipitation deficit is transformed into hydrological drought and how climate change and human activities affect this transformation process, which is helpful to gain a deep understanding of drought propagation process in this changing environment. This study proposed an observation-based natural and human-impacted catchment comparison method to assess the impacts of climate change and human activities on propagation from meteorological drought to hydrological drought. The method mainly consists of the following three steps: (1) selection of natural catchments through analysis of trends and change points of hydro-meteorological data, as well as statistics analysis of human influence based on land use and socio-economic indicators data sets; (2) calculation of drought propagation characteristics (e.g., drought severity, duration, and propagation time) based on run theory and the Pearson correlation coefficient; and (3) comparison of drought propagation characteristics of natural catchments between undisturbed and disturbed periods to identify the impacts of climate change on drought propagation, and comparison of the propagation characteristics between natural and human-impacted catchments during the disturbed period to investigate human influence on drought propagation. The Laohahe basin (with eleven sub-catchments), located in northern China, was evaluated via the proposed procedure, and standardized precipitation index (SPI) and standardized runoff index (SRI) were used to characterize meteorological and hydrological droughts, respectively. The results demonstrate that the proposed method is suitable tool for distinguishing natural and human-impacted catchments, and separating the impacts of climate change and human activities on drought propagation. Furthermore, the comparison results of different schemes show that climate change accelerates the propagation from meteorological drought to hydrological drought in the Laohahe basin, shortening it by approximately 3 months. Human activities, however, disturb and then delay the natural propagation from meteorological drought to hydrological drought, retarding it by 11–12 months. Although the Laohahe basin was selected as a case study in this paper, the proposed method can be applied in other regions as well to improve drought prediction and water resources management.