Fungal endophytes mainly belong to the phylum Ascomycota and colonize plants without producing symptoms. We report on the isolation of seed-borne fungal endophytes from Phragmites australis (common reed) that were ascribed to the genus Stagonospora. Nested polymerase chain reaction (PCR) assays revealed that a Stagonospora sp. regularly colonized reed as shown for a period of three years. In spring, it was only detected in roots, whereas in autumn, it could frequently be found in all organs, including seeds. Microcosm experiments revealed that seeds harbored viable propagules of the fungus that colonized the developing germling, indicating vertical transmission. Endophytic growth was confirmed by immunofluorescence microscopy, reisolation of the fungus after surface sterilization, and PCR. Aseptic microcosms were established for studying fungal contributions towards host vitality. Several Stagonospora isolates enhanced reed biomass. Seed-borne endophytic Stagonospora spp. thus can provide improved vigor to common reed, which could be most important when seed-derived germlings establish new reed stands.Additional keywords: ITS phylogeny, Phaeosphaeria.Fungi living in close association with plants can have effects on their host that range from detrimental to beneficial, depending on the partners involved and additional biotic and abiotic factors. Mycorrhiza is a well-documented type of a symbiotic interaction that is found at roots of the majority of higher plants. It is well known that mycorrhizal fungi are important for retrieving nutrients from soil and allocating them to their hosts (Hodge et al. 2001;Landeweert et al. 2001;Sharma et al. 1997). Endophytes represent another type of a putative symbiotic interaction between fungi and plants. Endophytes live within plant tissue without producing overt symptoms. Endophytic fungi have been recovered from all vegetative organs and from a broad range of plants growing from tropical to alpine habitats, indicating that these associations are widespread in nature (Carroll 1988;Petrini et al. 1992). Endophytes represent a wide taxonomical range of fungi, mostly within the phylum Ascomycota. Caroll (1988) distinguished two types of endophytic mutualism. Constitutive endophytic mutualism is typified by a systemic infection of grasses in genera Festuca, Lolium, and a few others in the family Poaceae with fungi of the anamorph genus Neotyphodium and the corresponding teleomorph genus Epichloë (family Clavicipitaceae, phylum Ascomycota) (Schardl 2001). These fungi proliferate in infected plants and are often vertically transmitted by seeds to the next generation of the host. It has been shown that these fungi improve the vitality of their hosts by increasing resistance against grazing, insects, drought, and microbial parasites (Clay 1992;Leuchtmann 1992;Schardl 2001). Furthermore, they improve biomass production and nutrient status (Arachevaleta et al. 1989;Groppe et al. 1999;Latch et al. 1985;Malinowski et al. 2000). On the other hand, Caroll (1988) characterized inducible en...