The soil-borne beneficial fungal endophyte Fusarium solani strain K (FsK) confers resistance and/or tolerance to biotic and abiotic stress in tomato and promotes plant growth in Nicotiana benthamiana. Characterizing its core RNAi machinery, we determined that FsK encodes two Dicer-like (DCL) endonucleases, 2 Argonaute (AGO) proteins and 4 RNA-dependent RNA (RDR) polymerases. FsK DCLs process endogenously-transcribed or exogenously-applied double stranded RNAs (dsRNAs) into short interfering RNAs (siRNAs) which lead to the degradation of homologous mRNAs. However, no RDR-mediated transitivity on the targeted mRNA or RNA-directed DNA methylation (RdDM) on the cognate DNA takes place in the fungus. Evidence that FsK colonization of N. benthamiana can lead to the induction of systemic silencing and RdDM of a host reporter gene is supported small RNA sequencing data.