This study was carried out during the 1991 and 1992 seasons on 4.5 ha of dryland conditions, in order to determinate the effect of the fescue endophyte (Acremonium coenophialum) on the Iiveweigth performance of grazing steers. Treatments used were T1: Tall fescue pasture (Festuca arundinacea Schreb) with high levels of endophyte infection (> 60%) and T2: Tall fescue pasture free of endophyte infection (0%). Pastures were established in April 22th 1991, with 20 kg of tall fescue seed cv. K-31 in the T1 and T2. The endophyte-infected tall fescue seed was obtained from certificate seed fields, being harvested during the summer of 1991. The endophyte-free seed was imported from New Zealand. Rotational grazing was used, using electric fences bands with a simmilar initial and final forage availability between treatments. A randomized design was used, with covariance analisis according to inicial weight of steers. During the first season, the average daily gains (ADG) were 0.653 b and 1.012 a kg for T1 and T2 , respectively. In the second season the ADG were: 0.786 b and 1.122 a kg for T1 and T2, respectively. Rectal temperatures during the second season were: 40 a and 39.3 b ºC for T1 and T2 , respectively.