Polycross designs bridge the two usual mapping approaches (bi-parental mapping and association analysis) and increase mapping power by incorporating greater genetic diversity. In this study, we used diverse genotypes selected from polycrossed progenies to identify marker loci associated with a set of seed- and forage-related traits as well as drought tolerance in orchardgrass (Dactylis glomerata L.). Associations were estimated between phenotypic traits and 923 DNA markers (including 446 inter-simple sequence repeats and 477 sequence-related amplified polymorphism markers). Positive relationship was found between forage yield and seed yield under normal and water-stress conditions, indicating that simultaneous improvement of seed and forage yield could be achieved in orchardgrass. The results of population structure analysis identified five main subpopulations possessing significant genetic differences. Under normal and water-stress conditions, respectively, 341 and 359 markers were significantly associated with the studied traits. Most of these markers were associated with more than one trait. Water-environment specificity of trait-associated markers indicates that genotype × environment interactions influence association analysis. However, 75 stable associations were identified across two moisture conditions for traits such as seed and forage yield. Marker–trait association revealed that markers M1/E1-5, M2/E6-5, M3/E4-6, P14-7 and P845-7 were consistently linked with drought-tolerance index. The identified marker alleles associated with multiple traits across environments may be considered for further analysis for their chromosome locations, the corresponding sequences and their potential functions.