The hypocrealean fungus Claviceps paspali is a parasite of wild grasses. This fungus is widely utilized in the pharmaceutical industry for the manufacture of ergot alkaloids, but also produces tremorgenic and neurotoxic indole-diterpene (IDT) secondary metabolites such as paspalitrems A and B. IDTs cause significant losses in agriculture and represent health hazards that threaten food security. Conversely, IDTs may also be utilized as lead compounds for pharmaceutical drug discovery. Current protoplast-mediated transformation protocols of C. paspali are inadequate as they suffer from inefficiencies in protoplast regeneration, a low frequency of DNA integration, and a low mitotic stability of the nascent transformants. We adapted and optimized Agrobacterium tumefaciens-mediated transformation (ATMT) for C. paspali and validated this method with the straightforward creation of a mutant strain of this fungus featuring a targeted replacement of key genes in the putative IDT biosynthetic gene cluster. Complete abrogation of IDT production in isolates of the mutant strain proved the predicted involvement of the target genes in the biosynthesis of IDTs. The mutant isolates continued to produce ergot alkaloids undisturbed, indicating that equivalent mutants generated in industrial ergot producers may have a better safety profile as they are devoid of IDT-type mycotoxins. Meanwhile, ATMT optimized for Claviceps spp. may open the door for the facile genetic engineering of these industrially and ecologically important organisms.