The Andes Cordillera acts as regional "Water Towers" for several countries and encompasses a wide range of ecosystems and climates. Several hydroclimatic changes have been described for portions of the Andes during recent years, including glacier retreat, negative precipitation trends, an elevation rise in the 0° isotherm, and changes in regional streamflow regimes. The Temperate-Mediterranean transition (TMT) zone of the Andes (35.5°-39.5°S) is particularly at risk to climate change because it is a biodiversity hotspot with heavy human population pressure on water resources. In this paper we utilize a new tree-ring network of Austrocedrus chilensis to reconstruct past variations in regional moisture in the TMT of the Andes by means of the Palmer Drought Severity Index (PDSI). The reconstruction covers the past 657 years and captures interannual to decadal scales of variability in late spring-early summer PDSI. These changes are related to the north-south oscillations in moisture conditions between the Mediterranean and Temperate climates of the Andes as a consequence of the latitudinal position of the storm tracks forced by large-scale circulation modes. Kernel estimation of occurrence rates reveals an unprecedented increment of severe and extreme drought events during the last century in the context of the previous six centuries. Moisture conditions in our study region are linked to tropical and high-latitude ocean-atmospheric forcing, with PDSI positively related to Niño-3.4 SST during spring and strongly negatively correlated with the Antarctic Oscillation (AAO) during summer. Geopotential anomaly maps at 500-hPa show that extreme dry years are tightly associated with negative height anomalies in the Ross-Amundsen Seas, in concordance with the strong negative relationship between PDSI and AAO. The twentieth century increase in extreme drought events in the TMT may not be related to ENSO but to the positive AAO trend during late-spring and summer resulting from a gradual poleward shift of the mid-latitude storm tracks. This first PDSI reconstruction for South America demonstrates the highly significant hindcast skill of A. chilensis as an aridity proxy.