Liverwort Marchantia polymorpha is considered as the key species for addressing a myriad of questions in plant biology. Exploration of drought tolerance mechanism(s) in this group of land plants offers a platform to identify the early adaptive mechanisms involved in drought tolerance. The current study aimed at elucidating the drought acclimation mechanisms in liverwort’s model M. polymorpha. The gemmae, asexual reproductive units of M. polymorpha, were exposed to sucrose (0.2 M), mannitol (0.5 M) and polyethylene glycol (PEG, 10%) for inducing physiological drought to investigate their effects at morphological, physiological and biochemical levels. Our results showed that drought exposure led to extreme growth inhibition, disruption of membrane stability and reduction in photosynthetic pigment contents in M. polymorpha. The increased accumulation of hydrogen peroxide and malondialdehyde, and the rate of electrolyte leakage in the gemmalings of M. polymorpha indicated an evidence of drought-caused oxidative stress. The gemmalings showed significant induction of the activities of key antioxidant enzymes, including superoxide dismutase, catalase, ascorbate peroxidase, dehydroascorbate reductase and glutathione S-transferase, and total antioxidant activity in response to increased oxidative stress under drought. Importantly, to counteract the drought effects, the gemmalings also accumulated a significant amount of proline, which coincided with the evolutionary presence of proline biosynthesis gene Δ1-pyrroline-5-carboxylate synthase 1 (P5CS1) in land plants. Furthermore, the application of exogenous abscisic acid (ABA) reduced drought-induced tissue damage and improved the activities of antioxidant enzymes and accumulation of proline, implying an archetypal role of this phytohormone in M. polymorpha for drought tolerance. We conclude that physiological drought tolerance mechanisms governed by the cellular antioxidants, proline and ABA were adopted in liverwort M. polymorpha, and that these findings have important implications in aiding our understanding of osmotic stress acclimation processes in land plants.