In this research, we conducted histochemical, inhibitor and other experiments to evaluate the chemical interactions between intracellular bacteria and plant cells. As a result of these experiments, we hypothesize two chemical interactions between bacteria and plant cells. The first chemical interaction between endophyte and plant is initiated by microbe-produced ethylene that triggers plant cells to grow, release nutrients and produce superoxide. The superoxide combines with ethylene to form products hydrogen peroxide and carbon dioxide. In the second interaction between microbe and plant the microbe responds to plant-produced superoxide by secretion of nitric oxide to neutralize superoxide. Nitric oxide and superoxide combine to form peroxynitrite that is catalyzed by carbon dioxide to form nitrate. The two chemical interactions underlie hypothesized nutrient exchanges in which plant cells provide intracellular bacteria with fixed carbon, and bacteria provide plant cells with fixed nitrogen. As a consequence of these two interactions between endophytes and plants, plants grow and acquire nutrients from endophytes, and plants acquire enhanced oxidative stress tolerance, becoming more tolerant to abiotic and biotic stresses.