Fungal endophyte-grass relationships vary from mutualism to parasitism.  Many asexually reproducing endophytes are considered defensive mutualists by providing their host protection from herbivores through the production of alkaloids.  In contrast, the sexually reproducing endophyte Epichloë glyceriae is considered parasitic because it sterilizes its host Glyceria striata.  Chemical defenses have generally been found to be negligible in sexual endophytes.  In this study, G. striata infected with E. glyceriae was tested for constitutive and inducible defense against herbivory.  Individuals were damaged by fall armyworm caterpillars, mechanical cutting, or left undamaged.  An aphid bioassay was administered to test the plant's toxicity to herbivores.  In addition, loline concentration was quantified using gas chromatography and mass spectrometry and loline RNA expression quantified using real-time RT-PCR.  The mechanically cut treatment supported significantly fewer live aphids compared to the control treatment (F_2,63 = 4.45, p < 0.02).  The mechanically cut treatment had a greater loline alkaloid concentration (Kruskal-Wallis F = 12.577; p < 0.005) and loline RNA expression at 3 days post damage (F_2,13 = 5.362, p < 0.05) than the control treatment.  The herbivore-damaged treatment had low levels of damage and intermediate levels of loline concentrations and loline RNA expression.  Our study is the first to demonstrate sexual endophytes can produce alkaloid defense compounds in quantities large enough to reduce aphid performance and that this production is wound-inducible.  These results suggest wound-induced responses may be ancestral within the Epichloë clade.