Members of genus Neotyphodium are asexual derivatives of sexual Epichloë species and maintain endophytic relationships with many cool-season grasses. Most Neotyphodium species analyzed so far are interspecific hybrids with combined or partial genomes of two or three ancestral species. In this study we characterized Neotyphodium isolates from Cinna arundinacea, a perennial cool-season grass from eastern North America. A total of 23 isolates grouping into two distinct morphotypes were obtained from five local populations of C. arundinacea. PCR amplification and cloning of translation-elongation factor 1-α (tefA) and β-tubulin (tubB) genes of 10 isolates comprising both morphotypes (two isolates per location) revealed that all 10 contain two copies of tefA and tubB genes. Surprisingly phylogenetic analysis of mainly non-coding sequence from these genes revealed that both copies in each isolate were inherited from Epichloë typhina ancestors, indicating that the C. arundinacea endophytes arose through intraspecific hybridization between two E. typhina progenitors with extant relatives infecting hosts Poa nemoralis and Poa pratensis. Furthermore the tefA sequences were identical between isolates, as were tubB sequences, despite obvious morphological differences. Profiling of alkaloid biosynthetic genes from these isolates indicated the presence of the peramine biosynthetic gene (perA) and the absence of genes required for biosynthesis of lolines, indole-diterpenes and ergot alkaloids. Thus this endophyte is potentially capable of producing peramine in planta and providing protection to its host from insect pests. The absence of genes for indole-diterpenes and ergot alkaloid biosynthesis makes this endophyte a candidate for agricultural applications. Based on our phylogenetic analysis, alkaloid profiling and description of morphological characteristics, we propose the name Neotyphodium schardlii for these isolates from C. arundinacea, a new member of genus Neotyphodium and the first described to have arisen through intraspecific hybridization.