Water retaining agent (WRA) is widely used for soil erosion control and agricultural water saving. Here, we evaluated the effects of the combination of beneficial soil bacterium Bacillus amyloliquefaciens strain GB03 and WRA (the compound is super absorbent hydrogels) on drought tolerance of perennial ryegrass (Lolium perenne L.). Seedlings were subjected to natural drought for maximum 20 days by stopping watering and then rewatered for seven days. Plant survival rate, biomass, photosynthesis, water status and leaf cell membrane integrity were measured. The results showed that under severe drought stress (20-day natural drought), compared to control, GB03, WRA and GB03+WRA all significantly improved shoot fresh weight, dry weight, relative water content (RWC) and chlorophyll content and decreased leaf relative electric conductivity (REC) and leaf malondialdehyde (MDA) content; GB03+WRA significantly enhanced chlorophyll content compared to control and other two treatments. Seven days after rewatering, GB03, WRA and GB03+WRA all significantly enhanced plant survival rate, biomass, RWC and maintained chlorophyll content compared to control; GB03+WRA significantly enhanced plant survival rate, biomass and chlorophyll content compared to control and other two treatments. The results established that GB03 together with water retaining agent promotes ryegrass growth under drought conditions by improving survival rate and maintaining chlorophyll content.