Piriformospora indica has been shown to improve the growth of many plant species including Arabidopsis thaliana, but the mechanism by which this is achieved is still unclear. Arabidopsis root colonization by P. indica was examined in sterile culture on the medium of Murashige and Skoog. P. indica formed intracellular structures in Arabidopsis root epidermal cells and caused changes in root growth, leading to stunted and highly branched root systems. This effect was because of a diffusible factor and could be mimicked by IAA. In addition, P. indica was shown to produce IAA in liquid culture. We suggest that auxin production affecting root growth is responsible for, or at least contributes to, the beneficial effect of P. indica on its host plants.