Phytoremediation utilizing plants and microbes has been increasingly adopted as a green technology for cleaning up heavy metal polluted soils. Cd polluted soil and native bermudagrass from Liuyang and Zhuzhou in Hunan province of China were collected to investigate microbial diversity and isolate Cd resistant fungi, and then to determine the effect of Cd resistant fungi on Cd tolerance and transportation of bermudagrass. The functional diversity of microorganisms was evaluated using the BIOLOG Eco method. Cd-resistant fungi strain was isolated and identified as Aspergillus aculeatus based on the ribosomal internal transcribed spacer region sequence analysis. Bermudagrass was exposed to control, Cd only, and Cd plus A. aculeatus (Cd + A. aculeatus) with growth matrix (sawdust/sand = 3/1 in volume). Results indicated that Cd + A. aculeatus treated bermudagrass exhibited a higher photosynthetic activity compared to Cd only treated plants. Inoculation of A. aculeatus resulted in a decrease in stem and leaf Cd concentrations, to a greater extent for Cd-sensitive than for Cd-tolerant genotype. However, inoculation of A. aculeatus increased root Cd concentration under Cd stress conditions, significantly elevated soil pH, and decreased soil water-soluble Cd concentration. These results suggested that A. aculeatus might be potentially applied to improve Cd tolerance and to reduce Cd transportation to shoot of bermudagrass.