Hyphal anastomosis, or vegetative hyphal fusion, establishes the interconnection of individual hyphal strands into an integrated network of a fungal mycelium. In contrast to recent advances in the understanding of the molecular basis for hyphal anastomosis, knowledge of the physiological role of hyphal anastomosis in the natural habitats of filamentous fungi is still very limited. To investigate the role of hyphal anastomosis in fungal endophyte-plant interactions, we generated mutant strains lacking the Epichloë festucae soft (so) gene, an ortholog of the hyphal anastomosis gene so in the endophytic fungus E. festucae. The E. festucae Δso mutant strains grew similarly to the wild-type strain in culture but with reduced aerial hyphae and completely lacked hyphal anastomosis. The most striking phenotype of the E. festucae Δso mutant strain was that it failed to establish a mutualistic symbiosis with the tall fescue plant host (Lolium arundinaceum); instead, it killed the host plant within 2 months after the initial infection. Microscopic examination revealed that the death of the tall fescue plant host was associated with the distortion and disorganization of plant cells. This study suggests that hyphal anastomosis may have an important role in the establishment/maintenance of fungal endophyte-host plant mutualistic symbiosis.