Traditional rice varieties, although low producers of yield, are more amenable to organic farming practices that cause less damage to the environment and human health. Improved growth and reduced disease incidence would produce higher yields, and endophytic fungi have proven to be effective in achieving these ends in wheat. With this in view, endophytic fungal assemblages of two traditional rice varieties of Sri Lanka ie Suwandel and Kaluheenati were evaluated for their effect on the growth and disease incidence of rice plants, because the endophytic mycoflora of these two traditional rice varieties and their effects have not been studied before. The most common and the highest occurring endophytes of both rice varieties ie Absidia and Cylindrocladium were tested to determine their effect on rice plant growth and the results showed that the plants inoculated with both fungal isolates showed significant increases (p≤ 0.05) in plant height, fresh weight and dry weight. Twenty two endophytic fungal isolates common to both rice varieties were screened using dual culture assay for their ability to control the mycelial growth of Magnaporthe grisea, the causative agent of rice blast disease. All tested endophytes controlled pathogen growth by coiling the hyphae around the pathogen and forming clamps and loops. However, Absidia and Acremonium showed the highest growth inhibition of the pathogen (100%) and showed an abundance of the above inhibitory structures. The effect of crude culture filtrates of thirteen endophytic fungi tested using the diffusion plate method indicated antagonistic activity against the rice pathogen. In planta tests were carried out to assess the effect of three endophytic fungi ie Acremonium, Absidia and Penicillium on infection by M. grisea. Disease symptoms were observed only on the leaves of the rice plants grown from Penicillium inoculated seedlings and on plants used as controls sprayed with a 1× 107 spores/mL suspension of the pathogen. Pre-inoculation with Acremonium and Absidia were effective in preventing infection by the blast fungus. No disease symptoms were observed in plants pre-inoculated with endophytes and in plants used as controls sprayed with a 1× 105 spores/mL suspension of the pathogen. Twenty one endophytic fungi common to both rice varieties were assessed by the culture plate method in this study.