The identification of herbicide tolerance is essential for effective chemical weed control. According to whole-plant dose–response assays, none of 29 pond lovegrass [Eragrostis japonica (Thunb.) Trin.] populations were sensitive to penoxsulam. The effective dose values of penoxsulam causing 50% inhibition of fresh weight (GR50: 105.14 to 148.78 g ai ha−1) in E. japonica populations were much higher than the label rate of penoxsulam (15 to 30 g ai ha−1) in the field. This confirmed that E. japonica was tolerant to penoxsulam. Eragrostis japonica populations showed 52.83- to 74.76-fold higher tolerance to penoxsulam than susceptible barnyardgrass [Echinochloa crus-galli (L.) P. Beauv.]. The mechanisms of tolerance to penoxsulam in E. japonica were also identified. In vitro activity assays revealed that the penoxsulam concentration required to inhibit 50% of the acetolactate synthase (ALS) activity (IC50) was 12.27-fold higher in E. japonica than in E. crus-galli. However, differences in the ALS gene, previously found to endow target-site resistance in weeds, were not detected in the sequences obtained. Additionally, the expression level of genes encoding ALS in E. japonica was approximately 2-fold higher than in E. crus-galli after penoxsulam treatment. Furthermore, penoxsulam tolerance can be significantly reversed by three cytochrome P450 monooxygenase (CytP450) inhibitors (1-aminobenzotriazole, piperonyl butoxide, and malathion), and the activity of NADPH-dependent cytochrome P450 reductase toward penoxsulam in E. japonica increased significantly (approximately 7-fold higher) compared with that of treated E. crus-galli. Taken together, these results indicate that lower ALS sensitivity, relatively higher ALS expression levels, and stronger metabolism of CytP450s combined to bring about penoxsulam tolerance in E. japonica.