Narrow-leafed lupin (Lupinus angustifolius L.) is a grain legume well adapted to sandy soils of a Mediterranean climate and is the major grain legume in Australia. Improved herbicide tolerance of lupin cultivars is now considered as top priority by the industry for effective weed management. This paper reports induced mutation by seed mutagenesis in metribuzin-sensitive but anthracnose resistant cv. Tanjil, selection for metribuzin tolerant mutants in the field and evaluation of the tolerant mutants to metribuzin and anthracnose resistance. Two highly tolerant mutants Tanjil-AZ-33 and Tanjil-AZ-55 were identified and they were the first reported metribuzin tolerant mutants. The estimated mutation rate was 2.5 × 10−5. Tanjil-AZ-33 was six times and Tanjil-AZ-55 was four times more tolerant to metribuzin than the original cultivar Tanjil and they were also more tolerant than the tolerant cv. Mandelup. Tanjil-AZ-33 was the most tolerant lupin germplasm. Disease nursery assessment over 2 years revealed that both mutants also retained anthracnose resistance. Seed yield under irrigation was 4.2 t/ha for Tanjil-AZ-33 and 1.9 t/ha for cv. Tanjil when the seedlings were treated with metribuzin at 300 g/ha at the six-leaf stage. Clearly the mutation process has created new tolerance to metribuzin, but did not alter the anthracnose resistance. The mutant Tanjil-AZ-33 has been used as a parent in the lupin breeding program as a source of both metribuzin tolerance and anthracnose resistance. Seed mutagenesis followed by field selection in M2 proved to be an effective method to develop new tolerance to herbicides.