The Paleocene-Eocene Thermal Maximum (PETM) hyperthermal, ~ 56 million years ago (Ma), is the most dramatic example of abrupt Cenozoic global warming. During the PETM surface temperatures increased between 5 and 9 °C and the onset likely took < 20 kyr. The PETM provides a case study of the impacts of rapid global warming on the Earth system, including both hydrological and associated biogeochemical feedbacks, and proxy data from the PETM can provide constraints on changes in warm climate hydrology simulated by general circulation models (GCMs). In this paper, we provide a critical review of biological and geochemical signatures interpreted as direct or indirect indicators of hydrological change at the PETM, explore the importance of adopting multi-proxy approaches, and present a preliminary model-data comparison. Hydrological records complement those of temperature and indicate that the climatic response at the PETM was complex, with significant regional and temporal variability. This is further illustrated by the biogeochemical consequences of inferred changes in hydrology and, in fact, changes in precipitation and the biogeochemical consequences are often conflated in geochemical signatures. There is also strong evidence in many regions for changes in the episodic and/or intra-annual distribution of precipitation that has not widely been considered when comparing proxy data to GCM output. Crucially, GCM simulations indicate that the response of the hydrological cycle to the PETM was heterogeneous – some regions are associated with increased precipitation – evaporation (P – E), whilst others are characterised by a decrease. Interestingly, the majority of proxy data come from the regions where GCMs predict an increase in PETM precipitation. We propose that comparison of hydrological proxies to GCM output can be an important test of model skill, but this will be enhanced by further data from regions of model-simulated aridity and simulation of extreme precipitation events.