Android Toolbar widget is the new UI android components available in AppCompt v21. It works just like action bar. It can be used as action bar in a dialog with support from API 7 onwards . This tutorial helps to create a toolbar in android dialog display. Use the following steps to complete this task.

Step -1 You have to put AppCompat dependencies in build.gradle(app)

compile 'com.android.support:appcompat-v7:22.1.0'

Step-2 Now you need to include Android Tool Bar layout in your custom dialog layout in xml.

<RelativeLayout xmlns:android="http://schemas.android.com/apk/res/android"
    xmlns:app="http://schemas.android.com/apk/res-auto"
    android:layout_width="match_parent"
    android:layout_height="match_parent">

    <android.support.v7.widget.Toolbar
        android:id="@+id/my_toolbar"
        android:layout_width="match_parent"
        android:layout_height="wrap_content"
        android:layout_alignParentTop="true"
        android:background="?attr/colorPrimary"
        android:minHeight="?attr/actionBarSize"
        android:theme="@style/ThemeOverlay.AppCompat.Dark.ActionBar"
        app:popupTheme="@style/ThemeOverlay.AppCompat.Light"/>

    <TextView
        android:id="@+id/text"
        android:layout_width="wrap_content"
        android:layout_height="wrap_content"
        android:layout_below="@+id/my_toolbar"
        android:layout_centerHorizontal="true"
        android:layout_marginBottom="50dp"
        android:layout_marginTop="50dp"/>

</RelativeLayout>

Step-3 Create a class ActionBarDialog which extends DialogFragment class.

import android.app.Dialog;
import android.app.DialogFragment;
import android.os.Bundle;
import android.support.v7.widget.Toolbar;
import android.view.LayoutInflater;
import android.view.MenuItem;
import android.view.View;
import android.view.ViewGroup;
import android.view.Window;
import android.widget.TextView;

/**
 * Created by arvindkumar on 3/6/15.
 */
public class ActionBarDialog extends DialogFragment {

    @Override
    public View onCreateView(LayoutInflater inflater, ViewGroup container,
                             Bundle savedInstanceState) {
        Bundle args = getArguments();
        String title = args.getString("title");
        View v = inflater.inflate(R.layout.action_bar_dialog, container, false);
        TextView tv = (TextView) v.findViewById(R.id.text);
        tv.setText("This is an instance of ActionBarDialog");
        Toolbar toolbar = (Toolbar) v.findViewById(R.id.my_toolbar);
        toolbar.setOnMenuItemClickListener(new Toolbar.OnMenuItemClickListener() {
            @Override
            public boolean onMenuItemClick(MenuItem item) {
                // Handle the menu item
                return true;
            }
        });
        toolbar.inflateMenu(R.menu.menu_main);
        toolbar.setTitle(title);
        return v;
    }

    @Override
    public Dialog onCreateDialog(Bundle savedInstanceState) {
        Dialog dialog = super.onCreateDialog(savedInstanceState);
        // request a window without the title
        dialog.getWindow().requestFeature(Window.FEATURE_NO_TITLE);
        return dialog;
    }
}

Step-4 Need a specified theme

<!-- Base application theme. -->
    <style name="AppTheme" parent="Theme.AppCompat.Light.NoActionBar">
        <!-- Customize your theme here. -->
        <!--   your app branding color for the app bar -->
        <item name="colorPrimary">#ff19b525</item>
        <!--   darker variant for the status bar and contextual app bars -->
        <item name="colorPrimaryDark">#ff189f1f</item>
        <!--   theme UI controls like checkboxes and text fields -->
        <item name="colorAccent">#ff2fff2b</item>
    </style>

Step-5 Our activity don't have action bar so we will use action bar. We need to define a tool bar in this layout

<RelativeLayout xmlns:android="http://schemas.android.com/apk/res/android"
    xmlns:app="http://schemas.android.com/apk/res-auto"
    xmlns:tools="http://schemas.android.com/tools"
    android:layout_width="match_parent"
    android:layout_height="match_parent"
    tools:context=".MainActivity">

    <android.support.v7.widget.Toolbar
        android:id="@+id/toolbar"
        android:layout_width="match_parent"
        android:layout_height="wrap_content"
        android:layout_alignParentTop="true"
        android:background="?attr/colorPrimary"
        android:elevation="8dp"
        android:minHeight="?attr/actionBarSize"
        android:theme="@style/ThemeOverlay.AppCompat.Dark.ActionBar"
        app:popupTheme="@style/ThemeOverlay.AppCompat.Light"/>

Step-6 Now lets create a main activity

import android.os.Bundle;
import android.support.v7.app.ActionBarActivity;
import android.support.v7.widget.Toolbar;
import android.view.Menu;
import android.view.MenuItem;


public class MainActivity extends ActionBarActivity {

    @Override
    protected void onCreate(Bundle savedInstanceState) {
        super.onCreate(savedInstanceState);
        setContentView(R.layout.activity_main);
        Toolbar toolbar = (Toolbar) findViewById(R.id.toolbar);
        setSupportActionBar(toolbar);

        Bundle args = new Bundle();
        args.putString("title", "Dialog with Action Bar");
        ActionBarDialog actionbarDialog = new ActionBarDialog();
        actionbarDialog.setArguments(args);
        actionbarDialog.show(getFragmentManager(),"ACTION BAR DIALOG");
    }

    @Override
    public boolean onCreateOptionsMenu(Menu menu) {
        getMenuInflater().inflate(R.menu.menu_main, menu);
        return true;
    }

    @Override
    public boolean onOptionsItemSelected(MenuItem item) {
        int id = item.getItemId();
        if (id == R.id.action_settings) {
            return true;
        }
        return super.onOptionsItemSelected(item);
    }
}