Even highly mutually beneficial microbial-plant interactions, such as mycorrhizal- and rhizobial-plant exchanges, involve selfishness, cheating and power-struggles between the partners, which depending on prevailing selective pressures, lead to a continuum of interactions from antagonistic to mutualistic. Using manipulated grass-endophyte combinations in a five year common garden experiment, we show that grass genotypes and genetic mismatches constrain genetic combinations between the vertically (via host seeds) transmitted endophytes and the out-crossing host, thereby reducing infections in established grass populations. Infections were lost in both grass tillers and seedlings in F(1) and F(2) generations, respectively. Experimental plants were collected as seeds from two different environments, i.e., meadows and nearby riverbanks. Endophyte-related benefits to the host included an increased number of inflorescences, but only in meadow plants and not until the last growing season of the experiment. Our results illustrate the importance of genetic host specificity and trans-generational maternal effects on the genetic structure of a host population, which act as destabilizing forces in endophyte-grass symbioses. We propose that (1) genetic mismatches may act as a buffering mechanism against highly competitive endophyte-grass genotype combinations threatening the biodiversity of grassland communities and (2) these mismatches should be acknowledged, particularly in breeding programmes aimed at harnessing systemic and heritable endophytes to improve the agriculturally valuable characteristics of cultivars.