Fifty-six half-sib families of perennial ryegrass (Lolium perenne), derived from wild populations in Galicia, were examined for the presence of perennial ryegrass endophytes; 28 were endophyte-infected (E+) and 28 were endophyte-free (E−). All families were established in spaced-plant nurseries and trial plots at two locations in Galicia, in 1992. E+ families had a significantly (P<0·05) higher first cut, spring and total yield than E− families at one location in the third year after planting. At this location, water deficit was about 75% higher than at the other location in all three years of study. Endophyte did not affect crown rust susceptibility or forage quality (crude protein, water-soluble carbohydrate and in vitro digestibility). Ergovaline alkaloid concentration in the 28 E+ families varied from 0 to 0·55 μg/g dry matter (DM) (mean 0·15), with 14 families containing levels of ergovaline >0·1 μg/g DM. Thus endophyte infection may benefit the host in drought-prone areas of Galicia, with an increased chance of E+ plants being favoured by either natural or artificial selection.