Phenotypic plasticity is essential for organisms to adapt to local ecological conditions. Little is known about how mutualistic interactions, such as arbuscular mycorrhizal (AM) symbiosis, mediate plant phenotypic plasticity and to what extent this plasticity may be heritable (i.e. transgenerational effects). We tested for plant plasticity within- and across-generations in response to AM symbiosis and varying water availability in a full factorial experiment over two generations, using the perennial apomictic herb Taraxacum brevicorniculatum. We examined changes in phenotype, performance, and AM fungal colonization of the offspring throughout plant development. AM symbiosis and water availability triggered phenotypic changes during the life cycle of plants. Additionally, both triggered adaptive transgenerational effects, especially detectable during the juvenile stage. Drought stress and absence of AM fungi caused concordant plant phenotypic modifications towards a stress-coping phenotype within- and across-generations. AM fungal colonization of offspring was also affected by the parental environment. AM symbiosis can trigger transgenerational effects, including changes in functional traits related to resource-use acquisition and AM fungal colonization of the offspring, in turn affecting the biotic interaction. Thus, transgenerational effects of mycorrhizal symbiosis are not limited to plant fitness, but also improve plants ability to cope with environmental stress.