The accelerated rate of decline in groundwater levels across California’s Central Valley results from overdrafting and low rates of natural recharge and is exacerbated by droughts. The lack of observations with an adequate spatiotemporal resolution to constrain the evolution of groundwater resources poses severe challenges to water management efforts. Here we present SAR interferometric measurements of high-resolution vertical land motion across the valley, revealing multiscale patterns of aquifer hydrogeological properties and groundwater storage change. Investigating the depletion and degradation of the aquifer-system during 2007–2010, when the entire valley experienced a severe drought, we find that ~2% of total aquifer-system storage was permanently lost, owing to irreversible compaction of the system. Over this period, the seasonal groundwater storage change amplitude of 10.11 ± 2.5 km3 modulates a long-term groundwater storage decline of 21.32 ± 7.2 km3. Estimates for subbasins show more complex patterns, most likely associated with local hydrogeology, recharge, demand, and underground flow. Presented measurements of aquifer-system compaction provide a more complete understanding of groundwater dynamics and can potentially be used to improve water security.