Two AR542-endophyte infected tall fescue breeding pools were subjected to one cycle of selection for increased endophyte hyphal density. Hyphal density was assessed subjectively by microscopic examination of the leaf sheath. Levels of alkaloids produced by both the original and selected populations were subsequently measured during summer. Levels of lolines and peramine alkaloids increased significantly in one breeding pool (by 40% and 29%, respectively), with non-significant increases (by 24% and 2%) in the other breeding pool. The apparent correlation between observed hyphal density and levels of alkaloids supports the hypothesis that levels of lolines and peramine produced by fungal endophytes in their host grass are at least partly due to endophyte hyphal mass in the host sheath tissue. Measured lolines in one breeding pool were 21 times greater than the other, while sheath hyphal density was less. Possible explanations include contrasting patterns of hyphal colonisation beyond the sheath, and/or variation in the quantity of lolines produced per unit hyphal mass. Keywords: Neotyphodium coenophalium, endophyte, Festuca arundinacea, tall fescue, peramine, lolines, hyphal mass