Neotyphodium coenophialum strain e19 from tall fescue cv. Kentucky 31 carries dmaW1 and dmaW2, two gene homologues that encode dimethylallyltryptophan synthase, the enzyme for the first step in ergot-alkaloid biosynthesis. In our effort to disrupt both homologues and ultimately obtain marker-free mutants, we are using a marker-exchange strategy employing the Cre/ loxP site-specific recombination system. Of 1522 transformants obtained and screened, three were likely dmaW2 disruptants because they gave no PCR product from the wild-type locus, but yielded the larger PCR fragment from the disruption construct. The putative dmaW2-knockouts were also transformed with pKAES186, a plasmid with a cassette containing the cre and ble genes in between loxP sequences. The transformants obtained were screened for the presence of hph, cre and ble genes. The preliminary results indicate a loop-out of the hph gene. The transformants inoculated into endophyte-free tall fescue preserved their compatibility with the plant. The fungus grown from these plants will be further analysed for the presence of hph, cre and ble genes. Keywords: Cre/LoxP, dimethylallyltryptophan synthase, dmaW, Epichloë, ergot alkaloids, Festuca arundinacea, gene knockouts, Lolium arundinaceum, Neotyphodium coenophialum, tall fescue