Environmental concerns have focused attention on natural forms of disease control as potentially safe and effective alternatives to chemical pesticides. This has led to increased efforts to develop control strategies that rely on natural predators and parasites or that involve genetically engineered microbial pest control agents. This review deals with a natural form of biological control in which the virulence of a fungal pathogen is attenuated by an endogenous viral RNA genetic element: the phenomenon of transmissible hypovirulence in the chestnut blight fungus, Cryphonectria parasitica. Recent progress in the molecular characterization of a hypovirulence-associated viral RNA has provided an emerging view of the genetic organization and basic expression strategy of this class of genetic elements. Several lines of evidence now suggest that specific hypovirulence-associated virus-encoded gene products selectively modulate the expression of subsets of fungal genes and the activity of specific regulatory pathways. The construction of an infectious cDNA clone of a hypovirulence-associated viral RNA represents a major advancement that provides exciting new opportunities for examining the molecular basis of transmissible hypovirulence and for engineering hypovirulent strains for improved biocontrol. These developments have significantly improved the prospects of using this system to identify molecular determinants of virulence and elucidate signal transduction pathways involved in pathogenic responses. In addition, novel approaches are now available for extending the application of transmissible hypovirulence for management of chestnut blight and possibly other fungal diseases.