Interactions between plants and the root-colonizing fungus Fusarium oxysporum (Fo) can be neutral, beneficial, or detrimental for the host. Fo is infamous for its ability to cause wilt, root-, and foot-rot in many plant species, including many agronomically important crops. However, Fo also has another face; as a root endophyte, it can reduce disease caused by vascular pathogens such as Verticillium dahliae and pathogenic Fo strains. Fo also confers protection to root pathogens like Pythium ultimum, but typically not to pathogens attacking above-ground tissues such as Botrytis cinerea or Phytophthora capsici. Endophytes confer biocontrol either directly by interacting with pathogens via mycoparasitism, antibiosis, or by competition for nutrients or root niches, or indirectly by inducing resistance mechanisms in the host. Fo endophytes such as Fo47 and CS-20 differ from Fo pathogens in their effector gene content, host colonization mechanism, location in the plant, and induced host-responses. Whereas endophytic strains trigger localized cell death in the root cortex, and transiently induce immune signaling and papilla formation, these responses are largely suppressed by pathogenic Fo strains. The ability of pathogenic strains to compromise immune signaling and cell death is likely attributable to their host-specific effector repertoire. The lower number of effector genes in endophytes as compared to pathogens provides a means to distinguish them from each other. Coinoculation of a biocontrol-conferring Fo and a pathogenic Fo strain on tomato reduces disease, and although the pathogen still colonizes the xylem vessels this has surprisingly little effect on the xylem sap proteome composition. In this tripartite interaction the accumulation of just two PR proteins, NP24 (a PR-5) and a b-glucanase, was affected. The Fo-induced resistance response in tomato appears to be distinct from induced systemic resistance (ISR) or systemic acquired resistance (SAR), as the phytohormones jasmonate, ethylene, and salicylic acid are not required. In this review, we summarize our molecular understanding of Fo-induced resistance in a model and identify caveats in our knowledge.