In order to survive and adapt to the environment, it is imperative for fungi to be able to sense and respond to changes in extracellular pH conditions. In ascomycetes, sensing of extracellular pH is mediated by the Pal pathway resulting in activation of the PacC transcription factor at alkaline pH. The role of PacC in regulating fungal virulence and pathogenicity has been described in several pathogenic fungi but to date not in a symbiotic fungus. Epichloë festucae is a biotrophic fungal endophyte that forms a stable mutualistic interaction with Lolium perenne. In this study, pacC deletion (ΔpacC) and dominant active (pacC(C)) mutants were generated in order to study the cellular roles of PacC in E. festucae. Deletion of pacC resulted in increased sensitivity of the mutant to salt-stress but surprisingly did not affect the ability of the mutant to grow under alkaline pH conditions. Alkaline pH was observed to induce conidiation in wild-type E. festucae but not in the ΔpacC mutant. On the other hand the pacC(C) mutant had increased conidiation at neutral pH alone. Null pacC mutants had no effect on the symbiotic interaction with ryegrass plants whereas the pacC(C) mutant increased the tiller number. Examination of the growth of the pacC(C) mutant in the plant revealed the formation of aberrant convoluted hyphal structures and an increase in hyphal breakage, which are possible reasons for the altered host interaction phenotype.