Epichloë species and their asexual descendants (Acremonium endophytes) are fungal symbionts of C3 grasses that span the symbiotic continuum from antagonism to mutualism depending on the relative importance, respectively, of horizontal transmission of sexual spores versus vertical clonal transmission in healthy grass seeds. At least seven sexual Epichloë species are identifiable by mating tests, and many asexual genotypes are interspecific hybrids. Benefits conferred by the symbionts on host plants include protection from biotic factors and abiotic stresses such as drought. Four classes of beneficial alkaloids are associated with the symbionts: ergot alkaloids, indolediterpenes (lolitrems), peramine, and saturated aminopyrrolizidines (lolines). These alkaloids protect host plants from insect and vertebrate herbivores, including livestock. Genetic engineering of the fungal symbionts as more suitable biological protectants for forage grasses requires identification of fungal genes for alkaloid biosynthesis, and DNA-mediated transformation of the fungi.