The Indonesian sugarcane production in the dryland was not optimal due to physiological stress. The research to improve their physiological characteristics by arbuscular mycorrhizal application was conducted at inceptisol soil from April 2014 to February 2015, using factorial completely randomized design. The first factor was clones PS864, Kidangkencana, PS881, Bululawang, and VMC, whereas the second factor was timing of arbuscular mycorrhizal inoculum applications i.e.: in the field, nursery, and control. The results show that the mycorrhizal application in the nursery significantly increased the infection percentage (41.3%) at the age of 1 week after transplanting to the field. There are differences in physiological and growth performance of clones by the effect of timing of mycorrhizal application. Bululawang with mycorrhizal application in the nursery stage tended to have better physiological performance such as chlorophylls a, b, and total chlorophyll, photosynthesis rate, intercellular CO 2 concentration, leaf area, as well as the weight of stem biomass. Mycorrhizal application in the nursery stage showed the highest increase of net assimilation rate on the PS864 and, BL clones, and the highest crop growth rate on the PS864, KK and BL clones. The mycorrizal inoculum application in the nursery increased the biomass weight of stem (11-61.1%). Infection percentage of mycorrhiza was positively correlated with the biomass weight with r 2 values of 0.54.