This SBIR Phase I project will develop transgenic fungal endophyte to produce and sequester degradative enzymes during plant growth and for post harvest use of these enzymes to reduce recalcitrance and facilitate biomass conversion. Efficient production of biofuels from lignocellulosic biomass is limited by several factors including (1) producing large amounts of low-cost biomass sustainably (2) overcoming the natural recalcitrance of lignocellulose, and (3) reducing the high cost of enzymes used in biorefineries to convert cellulose and hemicellulose to their component sugars. This project will help overcome these limitations by developing endophytes, beneficial fungi that live naturally inside plants, as key components of an integrated system for producing low-cost cellulosic biofuels. Endophytes are increasingly recognized as vital contributors to plant yield, particularly for monocots. Endophytes that enhance plant yield will be engineered to produce and safely sequester degradative enzymes as the plant grows.<br/><br/>The broader/commercial impact of the project will be to develop and sell energy-crop seeds and biomass, and to license the novel endophyte. The technology will have a significant impact on fermentation chemicals and fuel industries and their competitiveness.