Nonergot alkaloid-producing endophytes from New Zealand were inserted into tall fescue (Festuca arundinacea) cultivars in an attempt to address the problem of fescue toxicosis in grazing sheep. A 3-yr grazing study was conducted to determine lamb performance and to evaluate toxicosis in lambs grazing nonergot alkaloid-producing endophyte-infected (AR542 or AR502), endophyte-free (E-), or wild-type toxic endophyte-infected (E+) Jesup tall fescue or nonergot alkaloid-producing endophyte-infected (AR542) Georgia-5 tall fescue. Replicated 0.11-ha tall fescue paddocks were established at the central Georgia Branch Station during September 1997 and stocked with lambs from spring 1998 through autumn 2000. Mean ergot alkaloid concentrations were higher (P < 0.01) in E+ forage than in AR542, AR502, and E- tall fescue, and ergot alkaloid concentrations in E- plants and plants infected with AR542 and AR502 were low. Forage availability did not differ (P = 0.92) across treatments during autumn and was higher (P < 0.05) in Georgia-5 AR542 than in Jesup AR502 and E+ pastures. Initial serum prolactin (PRL) concentrations did not differ (P = 0.58) across treatments during autumn, but were higher on Jesup AR542 than E+ during spring. Post-treatment serum PRL concentrations were depressed (P < 0.01) on E+ compared with AR542, AR502, and E- in both spring and autumn. Signs of heat stress were observed in E+ lambs during periods of high ambient temperatures. Mean post-treatment rectal temperature and mean stocking rate exhibited treatment x year interactions (P < 0.05). Lamb ADG was higher (P < 0.05) on AR542, AR502, and E- than on E+ tall fescue. Similarly, gain/hectare was higher (P < 0.015) on AR542, AR502, and E- than on E+. Tall fescue pastures containing AR542 and AR502 endophytes yielded lamb performance that did not differ from that on E- tall fescue and which was superior to performance on E+ tall fescue. Depressed PRL concentrations and elevated rectal temperatures as indicators of toxicosis were evident only in lambs grazing E+ tall fescue, suggesting that nonergot alkaloid-producing endophyte-infected tall fescue is a viable alternative for alleviating tall fescue toxicosis.