Double-stranded RNA (dsRNA) viruses in some fungi are associated with hypovirulence and have been used or proposed as biological control agents. We isolated 7.5-kb dsRNAs from 13 of 286 field strains of Fusarium graminearum isolated from maize in Korea. One of these strains, DK21, was examined in more detail. This strain had pronounced morphological changes, including reduction in mycelial growth, increased pigmentation, reduced virulence towards wheat, and decreased (60-fold) production of trichothecene mycotoxins. The presence or absence of the 7.5-kb dsRNA was correlated with the changes in pathogenicity and morphology. The dsRNA could be transferred to virus-free strains by hyphal fusion, and the recipient strain acquired the virus-associated phenotype of the donor strain. The dsRNA was transmitted to approximately 50% of the conidia, and only colonies resulting from conidia carrying the mycovirus had the virus-associated phenotype. Partial nucleotide sequences of the purified dsRNA identify an RNA-dependent RNA polymerase sequence and an ATP-dependent helicase that are closely related to those of Cryphonectria hypovirus and Barley yellow mosaic virus. Collectively, these results suggest that this dsRNA isolated from F. graminearum encodes traits for hypovirulence.