Two tall fescue [Lolium arundinaceum (Schreb.) Darbysh. = Schedonorus arundinaceus (Schreb.) Dumort. = Festuca arundinacea var. arundinacea Schreb.] plant genotypes with an Epichlo’ coenophiala (Morgan-Jones & W. Gams) C.W. Bacon & Schardl common toxic endophyte (CTE), one with a nontoxic strain (NTE19) and one with another Epichloè species (FaTG-4) were evaluated and compared with their respective endophyte-free clones for responses to water-deficit stress in the greenhouse. One of the plant genotypes (P27) showed a positive effect of its CTE strain on tiller production after stress and resumed watering. In transcriptome analysis of the pseudostems (leaf sheath whorls), differentially expressed genes (DEGs) were defined as having at least twofold expression difference and false discovery rate (FDR) < 0.05 in comparisons of water treatment (stressed or watered), endophyte presence or absence, or both. Stress affected 38% of the plant transcripts including those for the expected stress-response pathways. The DEGs affected by endophyte in stressed plants were unique to individual plant genotypes. In unstressed plants, endophyte presence tended to reduce expression of genes putatively for defense against fungi, but in unstressed P27 endophyte presence there was enhanced expression of dehydrin and heat shock protein genes. Our results indicated subtle and variable effects of endophytes on tall fescue gene expression; where the endophyte confers protection, its effects on plant gene expression may help prime the plant for stress resistance.