Trichoderma species are a group of fungi which is widely distributed in major terrestrial ecosystems; they are also commonly used as biocontrol agents for many plant diseases. A virus, namely Trichoderma harzianum hypovirus 1 (ThHV1), was identified in T. harzianum isolate T-70, and also infected isolate T-70D, together with its defective RNA (ThHV1-S). The ThHV1 genome possessed two Open Reading Frames (ORFs), namely ORF1 and ORF2. The start codon of ORF2 overlapped with the stop codon of ORF1 in a 43 nt long region. The polypeptide encoded by ORF2 of ThHV1 shared sequence similarities with those of betahypoviruses, indicating that ThHV1 is a novel member of Hypoviridea. Isolate T-70D, carrying both ThHV1 and ThHV1-S, showed abnormal biological properties, notably a decreased mycoparasitism ability when compared with isolate T-70. Both ThHV1 and ThHV1-S could be vertically transmitted to conidia and horizontally transmitted to T. harzianum isolate T-68 and T. koningiopsis T-51. The derivative strains carrying both ThHV1 and ThHV1-S showed decreased mycoparasitism ability, whereas strains carrying ThHV1 alone were normal, indicating that ThHV1-S is closely associated with the decreased mycoparasitism ability of T. harzianum isolate T-70D. ThHV1 was widely detected in isolates of T. harzianum, T. koningiopsis and T. atroviride originating from soil of China. Therefore, viruses in fungal biocontrol agents may also be a factor associated with the stability of their application.