Grazing of Echinopogon spp. by livestock in Australia has caused symptoms similar to those of perennial ryegrass staggers. We observed an endophytic fungus in the intercellular spaces of the leaves and seeds of New Zealand and Australian specimens of Echinopogon ovatus. Culture of surface-sterilized seeds from New Zealand specimens yielded a slow-growing fungus. An examination in which immunoblotting and an enzyme-linked immunosorbent assay (ELISA) were used indicated that E. ovatus plants from Australia and New Zealand were infected with fungi serologically related to Neotyphodium lolii (the endophyte of perennial ryegrass) and other Epichloe and Neotyphodium spp. endophytic in pooid grasses. No lolitrems (the indole-diterpenoids implicated as the causative agents of perennial ryegrass staggers), peramine analogs, or ergot alkaloids were detected in the infected specimens by high-performance liquid chromatography or ELISA. However, in endophyte-infected E. ovatus plants from New Zealand, analogs of the indole-diterpenoid paxilline (thought to be a biosynthetic precursor of the lolitrems and related tremorgens) were detected by ELISA, and N-formylloline was detected by gas chromatography. Endophyte-free specimens of New Zealand E. ovatus did not contain detectable paxilline analogs or lolines and were more palatable than infected specimens to adults of the pasture pest Listronotus bonariensis (Argentine stem weevil). Hyphae similar to those of the E. ovatus endophyte were also found in herbarium specimens of Echinopogon nutans var. major, Echinopogon intermedius, Echinopogon caespitosus, and Echinopogon cheeli. This appears to be the first time that an endophytic Neotyphodium species has been identified in grasses endemic to New Zealand or Australia.