In natural ecosystems, plants constitute suitable habitats and niches for the colonization of a diversity of microorganisms. Endophytic fungi, living in the inner of healthy plant tissues ubiquitously, exhibit complex interactions with their hosts (a continuum of mutualism, antagonism and neutralism) and different transmission modes (horizontal or vertical). Plant nutrient acquisition and stress tolerance may be strengthened by the fungal symbiont. However, a successful plant-fungal endophyte interaction requires the fine tuning of antagonistic interactions, which implies the evolution of unique self-regulating mechanisms on both sides to maintain a mutualistic interaction. Host species, fungal genotype and environmental factors such as climate and soil properties as well as the nutritional status of the plant will ultimately determine the outcome of the interaction. Additionally, ternary interactions with mycorrhizal fungi and mycoviruses may also be important components participating in the plant-endophyte association and, thus, influence the host phenotype. In this review, we attempt to outline the interactive mechanisms of plant-fungal endophyte associations on a morphological, physiological and molecular level.