Drought stress is a major environmental stress that impairs plant growth and development. The At14a-like1 (AFL1) gene encodes a stress-induced membrane protein involved in endocytosis, signal transduction, and proline accumulation. The objective of the present study was to investigate biological functions and underlying mechanisms of AFL1 regulation of drought tolerance in a perennial grass species, creeping bentgrass (Agrostis stolonifera). AsAFL1 was cloned from creeping bentgrass, and its expression was induced by drought stress. Motif analysis showed that AsAFL1 has five epidermal growth factor structural domains and one beta 1-integrin structural domain. Transient expression in tobacco epidermal cells indicated that AsAFL1 was localized at the plasma membrane. Overexpression of AsAFL1 in creeping bentgrass significantly enhanced drought tolerance, as manifested by significantly increased leaf relative water content, chlorophyll and proline contents but lower electrolyte leakage and malondialdehyde content. Comparative transcriptomic and weighted correlation network analysis (WGCNA) revealed that AsAFL1-mediated drought tolerance was related to transcriptional regulation of genes involved in phytohormone (abscisic acid, auxin, and strigolactone) biosynthesis and signaling, redox homeostasis, and biosynthesis of second metabolites (lignin, cutin, suberin and wax), as well as nutrient transport and mobilization.