Abstract: With comprehensive seepage monitoring data, traditional methods can effectively provide early warnings for seepage safety. However, after drought conditions, these methods show a delay in accurately reflecting the dam’s seepage status through monitoring information. By the time conventional seepage indicators signal potential danger, the optimal window for intervention has often passed, making traditional early warning approaches less effective under extreme drought scenarios. This article focuses on the extent of shrinkage crack development as a warning indicator, establishing a link between crack depth and seepage gradient. When the seepage gradient reaches its critical value, the corresponding crack depth is defined as the critical crack depth. This measure serves as an early warning sign for potential seepage failure in the dam. Additionally, to improve the practicality of monitoring, the article suggests using crack width as an early warning indicator for seepage, enabling timely safety alerts for future seepage events. First, the expansion behavior of dry shrinkage cracks was examined through compaction tests on clay samples. Results showed that the width of shrinkage cracks equals the combined displacement of soil on both sides of the crack. This soil displacement results from reduced soil porosity caused by shrinkage stress, which is strongly affected by the soil’s compaction level. Through soil sample testing, it was determined that soil moisture content influences the rate of crack development, while the degree of soil compaction governs the ultimate extent of crack formation. Analyzing shrinkage stress in clay under arid conditions, this study explored the development of dry shrinkage cracks in clay impervious structures. Based on the structural characteristics of spherical contraction, a macro-level calculation model for crack depth and width was developed, grounded in the shrinkage stress occurring during soil contraction. The patterns of change in soil crack depth and width were examined. Cracks form on the soil surface only when the horizontal shrinkage stress exceeds the soil's tensile strength, as indicated by crack propagation analysis. Once cracks develop, the alteration in the direction of horizontal shrinkage stress, combined with the effect of overload on the soil near the free surface, limits further deepening of the cracks. Using the distribution of soil matrix suction during drought, a relationship between crack depth and width was established. By combining matrix suction curves at various crack widths with crack depth development curves, the intersection point identifies the crack depth corresponding to a specific crack width. This enables estimation of crack depth based on observed crack width, leading to a proposed safety warning threshold for seepage after drought, with crack width serving as the indicator. Using the Baiguishan Reservoir, which experienced severe drought in 2014, as a case study, calculations showed that when the upstream clay blanket’s crack width reaches 3.00 cm, the corresponding crack depth is 3.8 m—still below the soil’s ultimate crack depth of 6.2 m. Considering the critical seepage gradient of the blanket layer, seepage failure is expected when crack depth exceeds 2.75 m. Therefore, 2.75 m is identified as the critical crack depth for dam seepage failure, corresponding to a crack width of 0.52 cm. Accordingly, a crack width of 0.52 cm is recommended as the early warning indicator for seepage failure in the blanket at normal water levels. This study converts early warning indicators derived from seepage safety monitoring data into observable crack parameters for routine inspections, enabling effective early warnings for future seepage events during severe drought conditions. This approach supports the safe operation and management of earth-rock dams under extreme drought.