Black grama (Bouteloua eriopoda) and fourwing saltbush (Atriplex canescens) are important grass and shrub species in arid rangelands of the northern Chihuahuan Desert. They are naturally colonized by dark septate endophytic fungi that cannot be eliminated by seed disinfestation. Plants were regenerated from both species and appeared to be fungus-free in axenic cultures. Analysis of callus and regenerated plants of both species using dual staining with light and scanning electron microscopy revealed fungal endophytes intrinsically associated with cells, roots and leaves of regenerated plants that are also associated with native plants. Fungal layers and biofilms prevent direct exposure of callus, root or leaf tissues to the external environment. Micropropagation is a valuable tool for identifying key fungal endophytes that enhance drought tolerance in native desert plants.