Background: Drought tolerance is an attribute maintained in plants by cross-talk between multiple and cascading metabolic pathways. Without a sequenced genome available for horse gram, it is difficult to comprehend such complex networks and intercalated genes associated with drought tolerance of horse gram (Macrotyloma uniflorum). Therefore, de novo transcriptome discovery and associated analyses was done for this highly drought tolerant yet under exploited legume to decipher its genetic makeup. Results: Eight samples comprising of shoot and root tissues of two horse gram genotypes (drought-sensitive; M-191 and drought-tolerant; M-249) were used for comparison under control and polyethylene glycol-induced drought stress conditions. Using Illumina sequencing technology, a total of 229,297,896 paired end read pairs were generated and utilized for de novo assembly of horse gram. Significant BLAST hits were obtained for 26,045 transcripts while, 3,558 transcripts had no hits but contained important conserved domains. A total of 21,887 unigenes were identified. SSRs containing sequences covered 16.25% of the transcriptome with predominant tri- and mono-nucleotides (43%). The total GC content of the transcriptome was found to be 43.44%. Under Gene Ontology response to stimulus, DNA binding and catalytic activity was highly expressed during drought stress conditions. Serine/threonine protein kinase was found to dominate in Enzyme Classification while pathways belonging to ribosome metabolism followed by plant pathogen interaction and plant hormone signal transduction were predominant in Kyoto Encyclopedia of Genes and Genomes analysis. Independent search on plant metabolic network pathways suggested valine degradation, gluconeogenesis and purine nucleotide degradation to be highly influenced under drought stress in horse gram. Transcription factors belonging to NAC, MYB-related, and WRKY families were found highly represented under drought stress. qRT-PCR validated the expression profile for 9 out of 10 genes analyzed in response to drought stress. Conclusions: De novo transcriptome discovery and analysis has generated enormous information over horse gram genomics. The genes and pathways identified suggest efficient regulation leading to active adaptation as a basal defense response against drought stress by horse gram. The knowledge generated can be further utilized for exploring other underexploited plants for stress responsive genes and improving plant tolerance.