A 2-year evaluation of perennial ryegrass (Lolium perenne) infected with wild endophyte (Neotyphodium lolii), AR1 endophyte or no endophyte was carried out in Hamilton, New Zealand. In contrast to wild endophyte-infected ryegrass, AR1-infected ryegrass does not produce the alkaloids lolitrem B or ergovaline. Annual pasture production was similar across endophyte treatments, averaging 18.3 t DM/ha in year 1 and 13.8 t DM/ha in year 2, and ryegrass tiller density and botanical composition were unaffected by endophyte status. A combined analysis of 3 short-term milk production tests in late spring (Nov. 1999), summer (Jan. 2000) and autumn (Mar. 2000) in the first experiment, showed a 6.7% advantage in milk production to cows grazing AR1-infected ryegrass compared with those grazing wild endophyte-infected ryegrass pastures (P<0.05). Milk composition was similar in all test periods and ryegrass staggers was not observed on any treatment. In a second experiment, weaned dairy calves were continuously stocked on the pastures described above from late spring 2000 to autumn 2001 and grazed to a mean sward height of 5 cm. Average calf liveweight gain and total liveweight gain per hectare were similar across treatments over the 5-month period, averaging 0.8 kg/calf.day and 822 kg/ha, respectively. Calves grazing wild endophyte-infected ryegrass developed mild ryegrass staggers in January and February, coinciding with a peak lolitrem B concentration in this experiment of 2.3 mg/kg DM, while those grazing AR1-infected or endophyte-free ryegrass pastures did not develop staggers. Information is also presented on herbage and alkaloid intake, blood plasma prolactin concentration, and cow temperature and respiration rate. Results from this initial evaluation under dairying indicate that AR1-infected ryegrass can produce similar pasture yields as wild endophyte-infected ryegrass, while offering small improvements in milk yield with no incidence of ryegrass staggers in grazing animals.