In many regions of the world, drought is projected to increase under climate change, with potential negative consequences for forests and their ecosystem services (ES). Forest thinning has been proposed as a method for at least temporarily mitigating drought impacts, but its general applicability and longer-term impacts are unclear. We use a process-based forest model to upscale experimental data for evaluating the impacts of forest thinning in a drought-susceptible valley in the interior of the European Alps, with the specific aim of assessing (1) when and where thinning may be most effective and (2) the longer-term implications for forest dynamics. Simulations indicate that forests will be impacted by climate-induced increases in drought across a broad elevation range. At lower elevations, where drought is currently prevalent, thinning is projected to temporarily reduce tree mortality, but to have minor impacts on forest dynamics in the longer term. Thinning may be particularly useful at intermediate and higher elevations as a means of temporarily reducing mortality in drought-sensitive species such as Norway spruce and larch, which currently dominate these elevations. However, in the longer term, even intense thinning will likely not be sufficient to prevent a climate change induced dieback of these species, which is projected to occur under even moderate climate change. Thinning is also projected to have the largest impact on long-term forest dynamics at intermediate elevations, with the magnitude of the impact depending on the timing and intensity of thinning. More intense thinning that is done later is projected to more strongly promote a transition to more drought-tolerant species. We conclude that thinning is a viable option for temporarily reducing the negative drought impacts on forests, but that efficient implementation of thinning should be contingent on a site-specific evaluation of the near term risk of significant drought, and how thinning will impact the rate and direction of climate driven forest conversion.