Key requirements for microbes to initiate and establish mutualistic symbiotic interactions with plants are evasion of potential host defense responses and strict control of microbial growth. Reactive oxygen species (ROS) produced by a specific NADPH oxidase isoform, NoxA, regulate hyphal growth in the mutualistic interaction between the fungal endophyte Epichloë festucae and its grass host Lolium perenne. Unlike mammalian systems, little is known about the fungal NADPH oxidase complex and its response to differentiation signals. We identify an E. festucae p67(phox)-like regulator, NoxR, dispensable in culture but essential in planta for the symbiotic interaction. Plants infected with a noxR deletion mutant show severe stunting and premature senescence, whereas hyphae in the meristematic tissues show increased branching leading to increased fungal colonization of pseudostem and leaf blade tissue. Inhibition of ROS production or overexpression of noxR recapitulates the hyperbranching phenotype in culture. NoxR interacts in vitro with the small GTP binding protein RacA and requires a functional RacA binding site to complement the noxR mutant and restore the wild-type plant interaction phenotype. These results show that NoxR is a key regulator of NoxA in symbiosis, where it acts together with RacA to spatially regulate ROS production and control hyphal branching and patterning.