We investigate properties of earthquake stress drops in simulations of evolving seismicity and stress field on a heterogeneous fault. The model consists of an inherently discrete strike-slip fault surrounded by a 3D elastic half-space. We consider various spatial distributions of frictional properties and analyze results generated by 150–300 model years. In all cases, the self-organized heterogeneous initial stress distributions at the times of earthquake failure lead to stress drops that are systematically lower than those predicted for a homogeneous process. In particular, the large system-sized events have stress drops that are consistently ∼25% of predictions based on the average fault strength. The type and amount of assumed spatial heterogeneity on the fault affect the stress-drop statistics of small earthquakes (ML<5) more than those of the larger events. This produces a decrease in the range of stress drops as the earthquake magnitudes increase. The results can resolve the discrepancy between traditional estimates of stress drops and seismological observations. The general tendency for low stress drops of large events provides a rationale for reducing the statistical estimates of potential ground motion associated with large earthquakes.