Drought stress can severely affect sugarcane growth and yield. The objective of this research was to identify candidate genes in sugarcane tillering seedlings in response to drought stress. We performed a comparative phenotypic, physiological and transcriptomic analysis of tiller seedlings of drought-stressed and well-watered “Guire 2” sugarcane, in a time-course experiment (5 days, 9 days and 15 days). Physiological examination reviewed that SOD, proline, soluble sugars, and soluble proteins accumulated in large amounts in tiller seedlings under different intensities of drought stress, while MDA levels remained at a stable level, indicating that the accumulation of osmoregulatory substances and the enhancement of antioxidant enzyme activities helped to limit further damage caused by drought stress. RNA-seq and weighted gene co-expression network analysis (WGCNA) were performed to identify genes and modules associated with sugarcane tillering seedlings in response to drought stress. Drought stress induced huge down-regulated in gene expression profiles, most of down-regulated genes were mainly associated with photosynthesis, sugar metabolism and fatty acid synthesis. We obtained four gene co-expression modules significantly associated with the physiological changes under drought stress (three modules positively correlated, one module negatively correlated), and found that LSG1-2, ERF1-2, SHKA, TIL, HSP18.1, HSP24.1, HSP16.1 and HSFA6A may play essential regulatory roles as hub genes in increasing SOD, Pro, soluble sugar or soluble protein contents. In addition, one module was found mostly involved in tiller stem diameter, among which members of the BHLH148 were important nodes. These results provide new insights into the mechanisms by which sugarcane tillering seedlings respond to drought stress.