Significance Endosymbiotic bacteria are found in diverse fungi, but little is known about how they communicate with their hosts. Some plant pathogenic bacteria use type III-translocated TAL effectors to control host transcription, and TAL-like proteins are encoded in genomes of the fungal endosymbiotic bacterium Mycetohabitans rhizoxinica . In this paper, we present evidence that these proteins are, like TAL effectors, type III-secreted, nuclear-localizing effectors that perturb host transcription and show that one enhances tolerance of the fungal host to cell membrane stress. Our characterization of an effector in a bacterial–fungal symbiosis opens a new door to molecular understanding of these interkingdom partnerships. Our findings also provide insight into the functional diversity and evolution of the TAL effector protein family.