Recent studies have suggested that the presence of endophytes in tall fescue can lead to decreased species richness in the associated plant community. To assess the generality of this hypothesis, a field study tested the effects of endophyte infection on a 3-yr-old successional field dominated by Festuca arundinacea. The potential importance of endophyte infection relative to other environmental factors was tested by including two additional treatments: the effects of soil fertility and mowing. Contrary to previous studies, a positive relationship was found between endophyte infection frequency and diversity (N = 23, F = 5.23, R2 = 0.19, P < 0.03). A strong interaction was found between the mowing treatment and endophyte infection frequency in predicting diversity (N = 22, F = 36.1, R2 = 0.84, P < 0.0001), where the maximum species richness was present in plots that were both mowed and highly endophyte infected. The relationship between endophytes and diversity varied through the successional continuum (the mowing treatments) but was generally positive. The soil in mowed plots was drier than in unmowed plots (t = 2.1, df = 28, P < 0.05). We suggest that heavy mowing decreases soil moisture levels enough to reduce the interspecific competitive ability of infected F. arundinacea, thereby promoting local diversity. Endophyte presence is important, but the previously reported negative relationship between endophyte infection and community diversity is probably overly simplistic in complex ecological settings.