Symbiosis between a fungus and a plant is a widespread phenomenon in nature. The outcome of such an interaction can vary in a seamless manner from mutualism to parasitism. In most cases, the host plant does not suffer, in fact it often gains an advantage from colonization by a fungus. This benefit is based on a fine-tuned balance between the demands of the invader and the plant response. If the interaction becomes unbalanced, disease symptoms appear or the fungus is excluded by induced host defence reactions. Symbioses of plants with beneficial or neutral endophytes share many common attributes with plant interactions with pathogens. Recent findings emerging from studies of compatible host-fungus interactions have enhanced our understanding of what determines whether the fungus behaves as an endophyte or a parasite and of how plants avoid exploitation by detrimental parasites but benefit from mutualistic endophytes.