Complex epigenetic regulation of alkaloid biosynthesis and host interaction by heterochromatin protein I in a fungal endophyte-plant symbiosis

•The E. festucae heterochromatin protein I regulates subtelomeric eas and ltm gene expression.•Deletion of hepA leads to derepression of eas and ltm genes in axenic culture.•HepA fails to localize to the nucleus in the ΔhepA mutant.•Just one third of genes differentially expressed in hepA in culture are upregulated.•Deletion of hepA has a dramatic effect on the plant host interaction phenotype.•Two thirds of genes differentially expressed in hepA in planta are upregulated. Epichloë festucae forms mutualistic symbiotic interactions with grasses of the Lolium and Festuca genera. Protection from insect and mammalian herbivory are the best-documented host benefits of these associations. The two main classes of anti-mammalian alkaloids synthesized by E. festucae are the ergot alkaloids and indole diterpenes, of which ergovaline and lolitrems are the principal terminal products. Synthesis of both metabolites require multiple gene products encoded by clusters of 11 genes located at the subtelomeric regions of chromosomes I and III respectively. These loci are essentially unexpressed in axenic culture but among the most highly expressed genes in planta. We show here that heterochromatin 1 protein (HepA) is an important component of the regulatory machinery that maintains these loci in a silent state in culture. Deletion of this gene led to derepression of eas and ltm gene expression under non-symbiotic culture conditions. Although there was no obvious culture phenotype, RNAseq analysis revealed that around 1000 genes were differentially expressed in the ΔhepA mutant compared to wild type with just one-third upregulated. Inoculation of the ΔhepA mutants into seedlings of Lolium perenne led to a severe host interaction phenotype characterized by a reduction in tiller length but an increase in tiller number. Hyphae within the leaves of these associations were much more abundant in the intercellular spaces of the leaves and aberrantly colonized the vascular bundles. This physiological change was accompanied by a dramatic change in the transcriptome with around 900 genes differentially expressed, with two thirds of these upregulated. This major physiological change was accompanied by a decrease in ltm gene expression and loss of the ability to synthesize lolitrems. These results show that HepA has an important role in controlling the chromatin state of these sub-telomeric secondary metabolite genes, including their symbiosis-specific regulation.