ABSTRACT: BACKGROUND: Fungal endophyte communities are often comprised of many species colonizing the same host. However, little is known about the causes of this diversity. On the one hand, the apparent coexistence of closely related species may be explained by the traditional niche differentiation hypothesis, which suggests that abiotic and/or biotic factors mediate partitioning. For endophytes, such factors are difficult to identify, and are therefore in most cases unknown. On the other hand, there is the neutral hypothesis, which suggests that stochastic factors may explain high species diversity. There is a need to investigate to what extent each of these hypotheses may apply to endophytes. RESULTS: The niche partitioning of two closely related fungal endophytes, Microdochium bolleyi and M. phragmitis, colonizing Phragmites australis, was investigated. The occurrences of each species were assessed using specific nested-PCR assays for 251 field samples of common reed from Lake Constance, Germany. These analyses revealed niche preferences for both fungi. From three niche factors assessed, i.e. host habitat, host organ and season, host habitat significantly differentiated the two species. M. bolleyi preferred dry habitats, whereas M. phragmitis prevailed in flooded habitats. In contrast, both species exhibited a significant preference for the same host organ, i.e. roots. Likewise the third factor, season, did not significantly distinguish the two species. Differences in carbon utilization and growth temperature could not conclusively explain the niches. The inclusion of three unrelated species of Ascomycota, which also colonize P. australis at the same locations, indicated spatio-temporal niche partitioning between all fungi. None of the species exhibited the same preferences for all three factors, i.e. host habitat, host organ, and time of the season. CONCLUSIONS: The fungal species colonizing common reed investigated in this study seem to exploit niche differences leading to a separation in space and time, which may allow for their coexistence on the same host. A purely neutral model is unlikely to explain the coexistence of closely related endophytes on common reed.