To generate new breed lines of bermudagrass and reduce management costs of turfgrass, gamma-ray irradiation was used for induction of dwarf mutants from a native bermudagrass (Cynodon dactylon) germplasm. Three dwarf-type mutant lines (7-9, 10-5 and 10-12) were isolated from 3000 irradiated stolons. The data from 3-year greenhouse tests and 2-year field tests indicated that the dwarf mutant lines had lower canopy height, shorter internodes and shorter leaves. The line 7-9 had a similar turf coverage rate to the wild-type control, while the lines 10-5 and 10-12 had a slower turf coverage rate than the wild-type control. Under drought stress, all three dwarf mutant lines maintained higher relative water content and lower ion leakage than the wild type in the greenhouse tests. The field tests showed that the dwarf mutant lines had lower leaf firing during a progressive drying of soil. Our results indicated that bermudagrass mutants induced by gamma radiation exhibited dwarf characteristics and improved drought resistance, which was probably associated with unbalance of plant hormones in vivo.