Arizona fescue (Festuca arizonica) often harbours asymptomatic, asexual endophytic fungi from the genus Neotyphodium. In agronomic grasses, Neotyphodium endophytes are often credited with a wide range of mutualistic benefits to its host many of which are related to fungal production of alkaloids for herbivore deterrence. Neotyphodium in the native grass Arizona fescue, however, usually produces alkaloids at levels too low to deter herbivores, and in general, does not behave mutualistically. This study uses microsatellite markers to examine rates of gene flow among four Arizona populations of Neotyphodium. Haplotypic diversity was generally low; only one population contained more than two haplotypes. Haplotypes carrying multiple loci for some or all of the microsatellite loci were also found, indicating a vegetative hybridization event between Neotyphodium and the grass choke pathogen from the genus Epichloë. Gene flow between Neotyphodium populations is very low, and likely much lower than the pollen mediated gene flow of its host. These differing rates of gene flow are predicted to create trait mismatching between endophyte and host and may explain the low, or lack of, alkaloid production by Neotyphodium in Arizona fescue and other native grass species.