Among the plethora of unusual secondary metabolites isolated fromStachylidium bicolorare the tetrapeptidic endolides A and B. Both tetrapeptides contain 3-(3-furyl)-alanine residues, previously proposed to originate from bacterial metabolism. Inspired by this observation, we aimed to identify the presence of endosymbiotic bacteria inS. bicolorand to discover the true producer of the endolides. The endobacteriumBurkholderia contaminanswas initially detected by 16S rRNA gene amplicon sequencing from the fungal metagenome and was subsequently isolated. It was confirmed that the tetrapeptides were produced by the axenicB. contaminansonly when in latency. Fungal colonies unable to produce conidia and the tetrapeptides were isolated and confirmed to be free ofB. contaminans. A second endosymbiont identified as related toSphingomonas leidyiwas also isolated.In situimaging of the mycelium supported an endosymbiotic relationship betweenS. bicolorand the two endobacteria. Besides the technical novelty, ourin situanalyses revealed that the two endobacteria are compartmentalized in defined fungal cells, prevailing mostly in latency when in symbiosis. Within the emerging field of intracellular bacterial symbioses, fungi are the least studied eukaryotic hosts. Our study further supports the Fungi as a valuable model for understanding endobacterial symbioses in eukaryotes.IMPORTANCEThe discovery of two bacterial endosymbionts harbored inStachylidium bicolormycelium,Burkholderia contaminansandSphingomonas leidyi, is described here. Production of tetrapeptides inside the mycelium is ensured byB. contaminans, and fungal sporulation is influenced by the endosymbionts. Here, we illustrate the bacterial endosymbiotic origin of secondary metabolites in an Ascomycota host.