Loline alkaloids are produced by mutualistic fungi symbiotic with grasses, and they protect the host plants from insects. Here we identify in the fungal symbiont, Neotyphodium uncinatum, two homologous gene clusters (LOL-1 and LOL-2) associated with loline-alkaloid production. Nine genes were identified in a 25-kb region of LOL-1 and designated (in order) lolF-1, lolC-1, lolD-1, lolO-1, lolA-1, lolU-1, lolP-1, lolT-1, and lolE-1. LOL-2 contained the homologs lolC-2 through lolE-2 in the same order and orientation. Also identified was lolF-2, but its possible linkage with either cluster was undetermined. Most lol genes were regulated in N. uncinatum and N. coenophialum, and all were expressed concomitantly with loline-alkaloid biosynthesis. A lolC-2 RNA-interference (RNAi) construct was introduced into N. uncinatum, and in two independent transformants, RNAi significantly decreased lolC expression (P < 0.01) and loline-alkaloid accumulation in culture (P < 0.001) compared to vector-only controls, indicating involvement of lolC in biosynthesis of lolines. The predicted LolU protein has a DNA-binding site signature, and the relationships of other lol-gene products indicate that the pathway has evolved from various different primary and secondary biosynthesis pathways.