The root-associated fungus LtVB3 was formerly reported as a potential, new biocontrol agent of Verticillium yellows of Chinese cabbage and Fusarium wilt of tomato. According to molecular phylogenetic analysis of the ITS 1-5.8S rDNA-ITS 2 gene regions and morphological characteristics, LtVB3 is here identified as Meliniomyces variabilis, a recently described species [formerly called “Variable White Taxon” (VWT)] in a new genus erected to accommodate sterile fungi with phylogenetic affinities to Rhizoscyphus ericae, an ericoid mycorrhizal fungus. In vitro inoculation experiments showed that LtVB3 colonized the roots of torch azalea and eucalyptus; however, growth was enhanced only in azalea but not in eucalyptus. Hyphae of M. variabilis formed intracellular structures typical of ericoid mycorrhizas in epidermal cells of azalea roots but did not produce any typical ectomycorrhizal structures with or within root cells of either host. In LtVB3-treated eucalyptus roots, some cells in the epidermal and cortical layers had wall appositions and thickenings, which appeared to restrict fungal growth.