Climate-induced extreme events could lead to drastic socioeconomic consequences, including altered cooperation behaviours. With survey experiments among Iraqi and Syrian refugees, this study finds drought experience could reduce altruism and group identity function as the key moderator. Previous research on climate change impact regularly considers conflict outcomes, thereby disregarding cooperative behaviour such as altruism. Drought has the potential to fuel inter-ethnic cleavages, thus contributing to conflicts. Yet this runs against resilience arguments suggesting people who experience environmental hardship are more cooperative. Here we examine altruism in survey experiments in a natural setting among refugees from Syria and Iraq. We match survey responses to observational data on drought and socioeconomic variables. Our findings speak to both arguments. First, we show that drought exposure is associated with decreased altruism for survey respondents generally. We further show how group identity moderates the relationship between drought and altruism. Our results suggest a decrease in altruism due to drought is much larger when the target of altruism is presented as a member of an antagonistic ethno-religious outgroup.