Drought is an important factor which limits growth of sugarcane. To elucidate the physiological and biochemical mechanisms of tolerance, a pot experiment was conducted at Sugarcane Research Institute, Kaiyuan, China. Two genotypes (Yuetang 93-159-sensitive and Yunzhe 05-51-tolerant), were subjected to three treatments; 70±5% (control), 50±5% (moderate drought) and 30±5% (severe drought) of soil field capacity. The results demonstrated that drought induced considerable decline in morpho-physiological, biochemical and anatomical parameters of both genotypes, with more pronounced detrimental effects on Yuetang 93-159 than on Yunzhe 05-51. Yunzhe 05-51 exhibited more tolerance by showing higher dry biomass, photosynthesis and antioxidant enzyme activities. Compared with Yuetang 93-159, Yunzhe 05-51 exhibited higher soluble sugar, soluble protein and proline contents under stress. Yunzhe 05-51 illustrated comparatively well-composed chloroplast structure under drought stress. It is concluded that the tolerance of Yunzhe 05-51 was attributed to improved antioxidant activities, osmolyte accumulation and enhanced photosynthesis. These findings may provide valuable information for future studies on molecular mechanism of tolerance.