Endophytic fungi of the genus Epichloë and their asexual Neotyphodium forms are thought to interact mutualistically with their host grasses, providing protection for the host against herbivores and pathogens mediated by fungal alkaloids. Most previous research has concentrated on agronomically important grasses, such as tall fescue, and its interactions with livestock grazers or invertebrate herbivores. In this study we focus on the woodland grass Brachypodium sylvaticum which is infected by the strictly host-specific endophyte Epichloë sylvatica. This fungus has two alternative modes of reproduction: the predominant asexual strains are seed-transmitted, whereas the rare sexual strains are capable of contagious spread by ascospores produced on stromata. To assess potential host protection from herbivory, we tested to what extent development of Spodoptera frugiperda, a noctuid generalist herbivore, was affected when fed on different genotypes of naturally infected (E+), artificially infected (F+), or uninfected (E–) leaf material of B. sylvaticum. In a feeding assay, insect larvae performed significantly better on a diet of uninfected leaves, even though previous studies have not detected alkaloid production by E. sylvatica. A possible explanation for this result may be the presence of an unknown compound in infected plants, acting as metabolic toxin against S. frugiperda larvae. The negative effect on insect larvae was increased when they were fed on a diet artificially infected by a particular genotype (F), suggesting that content of allelochemicals may depend on the fungal genotype. In a dual-choice test, neonate S. frugiperda larvae initially preferred uninfected seedlings over naturally infected seedlings, but only during the first 6 h of the experiment. This suggests that the unknown compounds can act as weak insect-feeding deterrents. To assess herbivory in natural stands of the host grass, nine infected populations of B. sylvaticum were examined for feeding damage. Damage due to microherbivores and macroherbivores was equal in most populations. However, microherbivores (mostly insects) showed a clear preference for tillers bearing fungal stromata, whereas asymptomatically infected tillers were less damaged. Thus, herbivore resistance of infected plants appears to be correlated with the mode of reproduction of fungal genotypes. This result is of evolutionary significance, since asexual, seed-transmitted endophytes depend on host fitness and seed production for their dispersal.