<jats:title>Abstract</jats:title><jats:p>Plant-associated fungi show diverse lifestyles from pathogenic to mutualistic to the host; however, the principles and mechanisms through which they shift the lifestyles require elucidation. The root fungus <jats:italic>Colletotrichum tofieldiae</jats:italic> (Ct) promotes <jats:italic>Arabidopsis thaliana</jats:italic> growth under phosphate limiting conditions. Here we describe a Ct strain, designated Ct3, that severely inhibits plant growth. Ct3 pathogenesis occurs through activation of host abscisic acid pathways via a fungal secondary metabolism gene cluster related to the biosynthesis of sesquiterpene metabolites, including botrydial. Cluster activation during root infection suppresses host nutrient uptake-related genes and changes mineral contents, suggesting a role in manipulating host nutrition state. Conversely, disruption or environmental suppression of the cluster renders Ct3 beneficial for plant growth, in a manner dependent on host phosphate starvation response regulators. Our findings indicate that a fungal metabolism cluster provides a means by which infectious fungi modulate lifestyles along the parasitic–mutualistic continuum in fluctuating environments.</jats:p>