Sugarcane is an economically important culture in Brazil, being the world most important source of sugar and ethanol production. Brazilian sugarcane culture is able to obtain large and significant contributions of nitrogen from plant-associated Biological Nitrogen Fixation (BNF), reducing the use of nitrogen fertilizers and leading to an increase in energy balance of the culture. Different populations of endophytic N2-fixing bacteria associated with sugarcane were identified. Besides BNF, these bacteria exhibit growth promoting traits by mechanisms involving nutrient solubilization, plant hormone production and pathogens antagonistic activity. BNF contribution efficiency to sugarcane is controlled by plant and bacteria genotypes as well as environmental conditions. Here, there will be reviewed the advances made in studies on molecular, cellular and physiological mechanisms by which sugarcane controls establishment and efficiency of endophytic association. Transcriptome profile analysis indentified several differentially expressed sugarcane genes during early stages of the association. Regulatory networks involved in various plant processes such as plant-microorganism recognition, defense, plant hormone signaling, plant growth and nitrogen metabolism were reported to be responsive to endophytic diazotrophic bacteria colonization. The data indicate that sugarcane actively participates in the association with these bacteria. Comprehension of how various sugarcane regulatory mechanisms are coordinated and connected to genotype and environmental signals, in order to control the establishment of a beneficial and endophytic type of association is still a big challenge. Nevertheless, the knowledge being accumulated may guide studies to improve plant association with endophytic diazotrophic bacteria and, possibly, to extend it to other crops.