The Global Navigation Satellite System (GNSS) surface deformation and Gravity Recovery and Climate Experiment (GRACE)/GRACE Follow-On (GFO) satellite gravity measurements serve as effective technical means for monitoring terrestrial water storage (TWS) changes, which can be utilized for extreme drought monitoring. In this study, we introduce an improved Kalman filtering method to recover reliable TWS changes from GNSS surface vertical deformation using Slepian basis function (SBF) in the Yangtze River basin (YRB). The GNSS- and GRACE/GFO-derived monthly and daily TWS changes are utilized to investigate the 2022 mega-drought in the YRB and analyze the response capabilities of GNSS and GRACE/GFO in detecting water storage changes at different depths during this drought period. Our results demonstrate that: (a) compared to traditional inversion methods, the standard deviations and correlation coefficients between the input signals and TWS changes inverted from simulated GNSS surface vertical deformation using the SBFs with improved Kalman filtering are improved by ~2.52-14.76 mm and ~0.4%-5.6%; (b) GNSS- and GRACE/GFO-derived monthly hydrological drought severity index (HDSI) effectively detected the 2022 mega-drought in the YRB and showed strong consistency with the SPEI and scPDSI, while the scPDSI underestimated drought severity in the upper YRB. Meanwhile, the GNSS-derived daily HDSI time series can better capture the high-temporal-resolution evolution characteristics of the 2022 mega-drought compared to GFO estimates; (c) compared to the GFO-HDSI, the GNSS-HDSI demonstrates greater sensitivity to standardized hydrological drought indices at different depths. Our study highlights both the significance and complementary nature of GNSS and GRACE/GFO for extreme drought monitoring.