To understand molecular mechanisms of perennial grass adaptation to drought stress, genes associated with drought avoidance or tolerance traits were identified and their expression patterns were characterized in C4 hybrid bermudagrass [Cynodon dactylon (L.) Pers.×C. transvaalensis Burtt Davy, cv. Tifway] and common bermudagrass (C. dactylon, cv. C299). Plants of drought-tolerant ‘Tifway’ and drought-sensitive ‘C299’ were exposed to drought for 5 d (mild stress) and 10 d (severe stress) by withholding irrigation in a growth chamber. ‘Tifway’ maintained significantly lower electrolyte leakage and higher relative water content than ‘C299’ at both 5 and 10 d of drought stress. Four cDNA libraries via suppression subtractive hybridization analysis were constructed and identified 277 drought-responsive genes in the two genotypes at 5 and 10 d of drought stress, which were mainly classified into the functional categories of stress defense, metabolism, osmoregulation, membrane system, signal and regulator, structural protein, protein synthesis and degradation, and energy metabolism. Quantitative-PCR analysis confirmed the expression of 36 drought up-regulated genes that were more highly expressed in drought-tolerant ‘Tifway’ than drought-sensitive ‘C299’, including those for drought avoidance traits, such as cuticle wax formation (CER1 and sterol desaturase), for drought tolerance traits, such as dehydration-protective proteins (dehydrins, HVA-22-like protein) and oxidative stress defense (superoxide dismutase, dehydroascorbate reductase, 2-Cys peroxiredoxins), and for stress signaling (EREBP-4 like protein and WRKY transcription factor). The results suggest that the expression of genes for stress signaling, cuticle wax accumulation, antioxidant defense, and dehydration-protective protein accumulation could be critically important for warm-season perennial grass adaptation to long-term drought stress.