Fungal endophyte-grass associations are diverse and complex. Some endophytes (e.g. Neotyphodium spp.) reproduce asexually by growing vegetatively into host seeds and many of these vertically-transmitted endophytes form mutualisms with their hosts by providing high levels of alkaloids, such as lolines, that reduce herbivore performance. Additionally, Neotyphodium coenophialum provides wound-inducible herbivore resistance through increased production of lolines. Neotyphodium likely evolved from Epichloë spp. which are sexually reproducing endophytes that are transmitted horizontally to the next host generation through production of stromata (fruiting bodies), which sterilize host grasses. We asked if wound-inducible resistance like that in N. coenophialum also occurs in the ancestral, sexually reproducing Epichloëglyceriae, which infects Glyceria striata. Host grasses were damaged by fall armyworm caterpillars, artificially cut, or left undamaged. An aphid bioassay tested the plant's toxicity to herbivores, expression of lolc (a gene in the loline biosynthesis pathway) was quantified using real-time RT-PCR, and loline concentration was quantified using gas chromatography and mass spectrometry. Artificially-damaged plants supported fewer live aphids, had greater lolc mRNA expression, and greater loline concentration than undamaged plants. Herbivore-damaged plants supported intermediate performance by aphids, low lolc mRNA expression, and minimal loline concentration. Our study is the first to demonstrate sexual endophytes can produce lolines following wounding. This suggests wound-induced responses are ancestral within the Epichloë/Neotyphodium clade and reveals a trait of grass endophytes that may have predisposed them for the evolution of defensive mutualisms with their hosts.