Loline alkaloids (LA), which are 1-aminopyrrolizidines with an oxygen bridge, are produced by Epichloë (anamorph=Neotyphodium) species, endophytes of grasses. LA are insecticidal, thus, helping to protect host plants from insect herbivory. The objective of this study was to identify genes associated with LA biosynthesis. Suppression subtractive hybridization PCR was used to isolate transcripts up-regulated during LA production in cultures of Neotyphodium uncinatum. Subtracted cDNAs were cloned and a lambda-phage cDNA library from an LA-expressing N. uncinatum culture was screened with subtracted cDNA. In BLAST searches, several cDNAs identified had sequence similarities to aspartate kinases and another with O-acetylhomoserine-(thiol)lyase. Differential expression of these two genes in LA-producing cultures of N. uncinatum was confirmed and in a survey of 23 isolates from 21 Neotyphodium and Epichloë species these two genes strictly correlated with LA production. These findings open up the possibility for detailed studies on genes and enzymes involved in LA production.