The continuum hypothesis predicts that parasites should evolve reduced virulence if they have higher opportunity for vertical transmission. However, when there is a trade-off between virulence and vertical transmission, selection may favor horizontal transmission and higher virulence. Atkinsonella hypoxylon is a fungal pathogen that reduces Danthonia fitness by 50% or more when it completely castrates hosts' chasmogamous inflorescences, despite the high opportunity for vertical transmission through cleistogamous seeds. Sporadically, infected hosts with partially castrated inflorescences (which have higher fecundity than completely castrated hosts) are observed in natural populations. Why are partially castrated plants rare if selection favors reduced virulence? We investigated whether there was genetic diversity for virulence among A. hypoxylon genotypes and the relationship between virulence and vertical transmission. We found that the fungal genotype significantly affects the occurrence of partial castration in Danthonia compressa. The proportion of seedlings that were vertically infected by their maternal plant was lower for partially castrated than for completely castrated plants. Our results demonstrate a trade-off between virulence and vertical transmission, explaining the maintenance of more virulent, completely castrating fungal genotypes in natural populations, and suggest that vertical transmission in plants is more complex than what is considered in current models.