Assessment of soil moisture conditions on permanent grassland in the upper Noteć valley is made using soil moisture index (SMI). To categorize soil moisture in the end of each 10-day period (decade) during the vegetation period (April-September) an original classification proposed by the authors is used. SMI enables the comparison of moisture conditions in soils with different water retention and the objective evaluation of soil drought and water excess. Assessment is made for grassland in wet, moist, periodically dry and dry habitats in 2013–2014. Optimal soil moisture class dominated in all habitats under mean precipitation conditions. Moderate and severe soil droughts occurred only in periodically dry and dry habitats. There is a weak relationship between SMI and agrometeorological parameters in decades, while a strong correlation has been found between the decade-by-decade changes of SMI and agrometeorological parameters. The highest correlation was found between SMI changes and agroclimatic water balance (subtraction of precipitation and potential evapotranspiration). Indicator-based evaluation method of soil moisture conditions on permanent grassland using mathematical modeling of soil water balance can be a useful research and monitoring tool in the absence of field measurements of soil moisture.