Abstract: The present invention is directed to methods and compositions of endophytic fungi that confer stress tolerance to inoculated plants, including both monocots and dicots. In particular, Fusarium species, isolated from the dunegrass, Leymus mollis, growing in plant communities on Puget Sound beaches of Washington State. Upon inoculating a target plant or plant part with the endophytic fungi, the resulting plant shows stress tolerance, particularly drought and salinity tolerance.