TAMARIX nilotica (Tamaricaceae) is an important wild medicinal plant. It inhabits semi-arid environments, where it is often one of the most important plants suitable for insect infestation. Thrips (Thysanoptera: Insecta) infect T. nilotica and cause the formation of galls, which affect plant growth and development. Therefore, the present work was undertaken to study the morpho-anatomical, biochemical, and physiological changes induced by insect infestation in T. nilotica. Zeatin (Zn), gibberellin (GA3), salicylic acid (SA), 24-epibrassinolide (BR), and abscisic acid (ABA) were increased in the infected stems relative to the healthy ones. Galled stems showed increased thickness of the periderm and phellem layers, whereas a large portion of the vascular cylinder had disappeared, leaving a large C-shaped cavity in which the mature insect nested. Gall sites exhibited decreased chlorophyll content which was associated with a decrease in the emission of chlorophyll a fluorescence. Moreover, total soluble sugars, sucrose, total free amino acids, total soluble protein, and mineral content, as well as the activities of SOD, CAT, PX, PO, APX, and AO, were significantly reduced in the infected Tamarix stems, whereas polysaccharides, proline, MDA, and H2O2 were increased compared with the healthy stems. Galled stems exhibited increased antiradical activity (expressed as IC50), which was concomitant with the accumulation of phenolics, tannins, alkaloids, and flavonoids and the enhancement of PAL. Six endophytic fungi inhabited Tamarix galls. The development of thrips galls on T. nilotica stems drastically impacted the host structure and its cellular metabolism and induced oxidative stress. The roles and effects of endophytic fungi on insect-induced galls warrants further exploration.