The threshold for Botrytis contamination of winegrapes is not fully known. Using a measurement of the fungal sterol, ergosterol, we aimed to understand how much grey mould of grapes can be tolerated before there is a perceivable impact on wine sensory characteristics. Methods and Results: Chardonnay grape bunches hand‐harvested in January 2016 from the Hunter Valley, NSW, were divided into one of five groups based on the visual assessment of the severity of grey mould using a scale of 0–4. Ergosterol analysis indicated that the fungal biomass of the five batches of grapes was 0.06, 0.28, 0.87, 1.50 and 4.25 g dry mass of fungus per kg wet mass. Grey mould infection resulted in an elevated concentration of benzaldehyde, 2‐pentyl furan, ethyl linoleate, (E)‐3‐hexenol, 3‐octanol, 1,5‐dimethyl‐naphthalene, 1,5‐dimethyl tetralin 1‐octen‐3‐ol, 1‐octen‐3‐one and 3‐octanone in the juice. 1‐Octen‐3‐ol, and 3‐octanone, ethyl‐3‐hydroxydodecanoate and isoamyl acetamide were elevated in wine made with Botrytis‐affected grapes. Sensory discrimination tests identified a difference between wine made from grapes with ≥0.87 g of dry mass of fungus/kg wet mass of grapes (equivalent to ≥2.57 mg ergosterol/kg grapes) and wine made from asymptomatic grapes. Conclusions: Ergosterol correlated with the degree of grey mould contamination and the threshold in Chardonnay grapes was 0.28–0.87 g dry mass fungus/kg fresh mass of grapes. Significance of the Study: Measurement of ergosterol has been evaluated as a quantitative estimate of the threshold for Botrytis contamination of winegrapes.