Ericoid mycorrhizas are associated with a number of host plants in the Ericaceae in high-elevation regions of Taiwan. The ability of these microorganisms to thrive in harsh environmental conditions in the regions implies their capability of decomposing plant organic matter (raw humus). The objective of this study was to investigate the decomposition characteristics of three ericoid mycorrhizal endophytes isolated from the roots of Formosan rhododendron (Rhododendron formosanum Hemsl.). Molecular analysis indicated that strains Rf9 and Rf32 belong to the genus Cryptosporiopsis while strain Rf28 is a member of the genus Phialocephala. Mycorrhizal synthesis experiment showed that the roots of synthesized seedlings produced hyphal coils, a characteristic of ericoid mycorrhiza. Decomposition ability analysis revealed that strains Rf28 and Rf32 had the highest rates of decomposition of organic matter (up to 10.4% after 70 days) while the value for strain Rf9 was about 6.8%. Consistently, these strains secreted extracellular oxidases when cultured on tannic acid medium. Enzyme assay revealed that strains Rf28 and Rf32 secreted peroxidase, laccase, tyrosinase, and cellulase, but strain Rf9 secreted mainly peroxidase and tyrosinase. Apparently, the differences in secreted hydrolytic enzymes among the three endophytes are related to their ability to decompose organic matter. In the mycorrhizal synthesis experiment, all inoculated seedlings survived in the organic matter substrate for 70 days and exhibited a stronger vigor than the control. This study demonstrated that these three isolated endophytes, Rf9, Rf28, and Rf32, are ericoid mycorrhizal fungi, capable of forming ericoid mycorrhiza with Formosan rhododendron. Meanwhile, all three endophytes can secrete hydrolytic enzymes to decompose organic matter for growth, presumably a prerequisite for the adaptation of Formosan rhododendron to the harsh environments of high elevation.