Endophytes play an important role in ecological and evolutionary processes in plants and have marked economic value. Seed-transmitted fungal endophytes are conventionally regarded as mutualistic symbionts, but their fitness consequences for the offspring of the host are not clear. Puccinellia distans infected with the fungus Epichloë typhina (E+) produces seeds that are several times smaller than normal (E−). This observation suggests that the E+ seedlings face a developmental disadvantage. Our growth chamber experiments compared the germination rates of the small E+ and large E− seeds of P. distans and examined the biomass allocation of seedlings to roots and shoots. The E+ seedlings germinated more slowly and maintained shorter shoots and a smaller root biomass for 30–50 days after sowing. Despite this disadvantage, the E+ plants more quickly increased their total size, attaining a larger shoot and whole-plant biomass. The shoot:root biomass ratio increased more rapidly through time in the E+ seedlings, attaining a value nine times higher in the E+ than the E− group 50 days after sowing. Such differences between the E+ and E− seedlings were not explained by the growth allometry between shoots and roots. The seedlings of P. distans infected with the Epichloë endophyte were initially handicapped by their postponed emergence, but this disadvantage was quickly overcome by their superior growth capacity. The decrease in the relative allocation to roots may indicate that endophytes increase the performance of roots as resource-acquiring organs and/or reduce the role of roots in protection against herbivores.