As the polyploidy progenitor of modern sugarcane, Saccharum spontaneum is considered to be a valuable resistance source to various biotic and abiotic stresses. However, little has been reported on the mechanism of drought tolerance in S. spontaneum. Herein, the physiological changes of S. spontaneum GXS87-16 at three water-deficit levels (mild, moderate, and severe) and after re-watering during the elongation stage were investigated. RNA sequencing was utilized for global transcriptome profiling of GXS87-16 under severe drought and re-watered conditions. There were significant alterations in the physiological parameters of GXS87-16 in response to drought stress and then recovered differently after re-watering. A total of 1569 differentially expressed genes (DEGs) associated with water stress and re-watering were identified. Notably, the majority of the DEGs were induced by stress. GO functional annotations and KEGG pathway analysis assigned the DEGs to 47 GO categories and 93 pathway categories. The pathway categories were involved in various processes, such as RNA transport, mRNA surveillance, plant hormone signal transduction, and plant-pathogen interaction. The reliability of the RNA-seq results was confirmed by qRT-PCR. This study shed light on the regulatory processes of drought tolerance in S. spontaneum and identifies useful genes for genetic improvement of drought tolerance in sugarcane.