Lichens are the result of a stable mutualism between a fungal and a photosynthesising partner (alga or cyanobacterium). In addition to the fungal partner in this mutualism, lichens are associated with endolichenic fungi which reside inside their thalli. The endolichenic fungi appear to have evolved with the lichen and many of them are a source of novel metabolites vested with unique bioactivities. There is very little information on the biology of endolichenic fungi and their interactions with the other components of a lichen microbiome. There is an urgent need to understand these aspects of endolichenic fungi such that their ecology and economic potential are known more completely. The current knowledge on endolichenic fungi is reviewed here.

The distribution of Xylaria endophytes in the leaves of 22 tree species of a dry thorn forest and 27 tree species of a stunted montane evergreen forest of the Western Ghats in southern India was studied. In addition, these endophytes were screened for the production of some bioactive metabolites and extracellular enzymes. All the tree species in both the forest types harboured xylariaceous endophytes. Generally, xylariaceous endophytic infection of the leaves increased during the wet season. Molecular analysis showed that most of the xylariaceous endophytes isolated belonged to Xylaria or Nemania. All endophytes produced cellulase, and most of the isolates produced laccase and lipase enzymes suggesting continuing their life in plant litter as saprotrophs. The culture extracts were inhibitory to fungi, bacteria and algae indicating that they can compete with such organisms in the forest floor while surviving as saprotrophs. Fungi with such dual life strategies appear to be a potential source for biotechnological exploitation.