Understanding the processes determining species range limits is central to predicting species distributions under climate change. Projected future ranges are extrapolated from distribution models based on climate layers, and few models incorporate the effects of biotic interactions on species' distributions. Here, we show that a positive species interaction ameliorates abiotic stress, and has a profound effect on a species' range limits. Combining field surveys of 92 populations, 10 common garden experiments throughout the range, species distribution models and greenhouse experiments, we show that mutualistic fungal endophytes ameliorate drought stress and broaden the geographic range of their native grass host Bromus laevipes by thousands of square kilometres (~ 20% larger) into drier habitats. Range differentiation between fungal-associated and fungal-free grasses was comparable to species-level range divergence of congeners, indicating large impacts on range limits. Positive biotic interactions may be underappreciated in determining species' ranges and species' responses to future climates across large geographic scales.