Microbial symbionts of plants can affect decomposition by altering the quality or quantity of host plant tissue (substrate) or the micro-environment where decomposition occurs (conditioning). In C3 grasses, foliar fungal endophytes (Clavicipitaceae) can increase plant resistance to drought and/or produce alkaloids that reduce herbivory – effects that may also influence host litter composition and subsequent litter decomposition. We studied the effect of the endophyte Epichloë sp. on litter decomposition in the Great Lakes dunes (USA) using a reciprocal design altering endophyte presence/absence in both American beachgrass Ammophila breviligulata substrate (litter bags) and its conditioning of the decomposition microenvironment. Symbiont treatments were crossed with rain-out shelters that altered growing season precipitation. The first year of decomposition, senesced leaf substrate from A. breviligulata with Epichloë decomposed 21% faster than endophyte-free substrate. By the third year, conditioning by live symbiotic plants reduced cumulative decomposition by 33% compared to plots planted with endophyte-free plants. Of the traits we examined – litter quantity, C:N ratio, mineral composition, fungal colonization, and carbon chemistry – increased litter quantity via greater tiller production was the primary trait shift associated with endophyte symbiosis. Epichloë in A. breviligulata litter also altered litter nitrogen decomposition dynamics, as evidenced by lower nitrogen and protein content in decomposed tissue from plants that hosted the endophyte. Differences in initial litter quality and subsequent colonization by saprotrophic fungi were ruled out as key drivers. Altered precipitation had negligible effects on decomposing processes in the dunes. Grass–Epichloë symbiosis altered nutrient cycling through increasing the rate of litter decomposition when present in the litter and through reducing litter decomposition by conditioning the decomposition microenvironment. Epichloë are widespread symbionts of grasses. Thus, their effects on decomposition could be an important, but often overlooked, driver of nutrient cycling in grass-dominated ecosystems.