There is increasing interest in using Gravity Recovery and Climate Experiment (GRACE) satellite data to remotely monitor groundwater storage variations; however, comparisons with ground‐based well data are limited but necessary to validate satellite data processing, especially when the study area is close to or below the GRACE footprint. The Central Valley is a heavily irrigated region with large‐scale groundwater depletion during droughts. Here we compare updated estimates of groundwater storage changes in the California Central Valley using GRACE satellites with storage changes from groundwater level data. A new processing approach was applied that optimally uses available GRACE and water balance component data to extract changes in groundwater storage. GRACE satellites show that groundwater depletion totaled ∼31.0 ± 3.0 km 3 for Groupe de Recherche de Geodesie Spatiale (GRGS) satellite data during the drought from October 2006 through March 2010. Groundwater storage changes from GRACE agreed with those from well data for the overlap period (April 2006 through September 2009) (27 km 3 for both). General correspondence between GRACE and groundwater level data validates the methodology and increases confidence in use of GRACE satellites to monitor groundwater storage changes.

Ground referencing GRACE satellite estimates of groundwater storage changes in the California Central Valley, USA