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Fusarium graminearum, a devastating pathogen of small grains, overwinters on crop residues and produces ephemeral perithecia. Accumulation of lipids in overwintering hyphae would provide reserves for overwinter survival and perithecium development. Fatty acid composition of cultures during perithecium development indicated a drop in neutral lipid levels during development but little change in fatty acid composition across stages. Microscopic examination of cultures early in sexual development revealed hyphal cells engorged with lipid bodies. In comparison, vegetative hyphae contained few lipid bodies. Microarray analysis was performed on wheat stems at stages of colonization through perithecium development. Gene expression analysis during stages of perithecium development both in planta and in vitro (previously published) supports the view that lipid biosynthesis occurs during early stages of wheat colonization leading to sexual development and that lipid oxidation occurs as perithecia are developing. Analysis of gene expression during the stages of wheat stem colonization also revealed sets of genes unique to these stages. These results support the view that lipids accumulate in hyphae colonizing wheat stalks and are subsequently used in perithecium formation on stalk tissue. These results indicate that extensive colonization of plant tissue prior to harvest is essential for subsequent sporulation on crop residues and, thus, has important implications for inoculum reduction.