Symbioses of grasses (Poaceae) with fungi of family Clavicipitaceae vary widely in relative benefits and detriments to the plant, and include mutualisms characterized by vertical transmission and protective effects of the fungus and its metabolites against vertebrate and invertebrate herbivores. This review focuses on the epichloae, a group of fungi within the Clavicipitaceae that are symbiotic with members of the grass subfamily Poöideae and comprise sexual fungi of genus Epichloë (Fr.) Tul. & C. Tul. and their asexual derivatives (form genus Neotyphodium A. E. Glenn, C. W. Bacon & R. T. Hanlin). Most epichloid fungi are vertically transmissible, and many produce antiherbivore alkaloids belonging to any of four distinct chemical classes: lolines, peramine, ergot alkaloids, and indole-diterpenes. Like many plant-associated Clavicipitaceae, fruiting of Epichloë species chokes host inflorescences, preventing seed production on the affected tillers. However, most Epichloë-infected grasses also produce asymptomatic inflorescences, which produce normal seeds that vertically transmit the symbiont. Vertical transmission provides the main or sole means of dissemination for asexual epichloae. Molecular phylogenetic evidence suggests that the origin of Poöideae-Epichloë symbioses was approximately coincident with the origin of this grass subfamily, with considerable cophylogenetic evolution since then. Most asexual epichloae arose from a more complex process of interspecific hybridizations, which can provide evolutionary diversification and counteract accumulated deleterious mutations in otherwise clonal symbionts. Evolution of the Poöideae-epichloae symbioses required a break in the link between virulence and transmission, by establishing highly vertical transmission without negative effects on the colonized seeds and seedlings.