1, Fungal endophytes of tall fescue, Festuca arundinacea, have been found to synthesize toxic alkaloids which function as an anti-herbivore defence. Ingestion of infected F. arundinacea causes widespread losses to the US livestock industry. We investigated whether the fungal endophyte Acremonium in the congeneric species, Festuca rubra, may be playing a similar role on four Scottish islands. 2, Hirta, an island in the St. Kilda group, is grazed by a population of feral Soay sheep which crashes every 3-5 years with up to 60% mortality. Fungal endophytes of F. rubla were present in 65-100% of shoots. Infection frequency was positively correlated with grazing pressure. Infection was significantly lower on the neighbouring ungrazed island of Dun, supporting the hypothesis that endophytes function to deter herbivory. 3, In contrast, on the Hebridean islands of Rum and Benbecula, there were no significant differences in endophyte infection between grazed and ungrazed populations of F. rubra. Here, infection rates were lower than on Hirta, suggesting that endophyte-host-grazer interactions were not significant. 4, In common garden experiments with F. rubra from St. Kilda and Rum, endophyte infection resulted in higher survival rates of plants. However, there were no significant differences between infected and uninfected plants in leaf and shoot growth. Thus, while variation in infection frequencies on Hirta was most likely due to selective grazing of uninfected plants, the effect of infection status on plant survival may also have influenced these frequencies. 5, Infected F. rubra from St. Kilda was found to be toxic and cause mortality in locust bioassays. Two additional results suggested that the fungal endophytes of F. rubra may function as an antiherbivore defence which is inducible, and could influence sheep population crashes on St. Kilda. First, the concentration of endophytic hyphae was significantly greater in infected plants from grazed patches than infected plants from adjacent ungrazed patches, This indicated a relationship between grazing pressure and endophyte concentration. Secondly, in a simulated grazing experiment with infected plants from St. Kilda, levels of the ergot alkaloid, ergovaline, in clipped plants were significantly greater than the undetectable levels in infected plants which were not clipped ('ungrazed') for 12 months.