Abstract Bacterial immune systems employ diverse mechanisms to restrict phage infection, yet the regulation of defense expression in response to different infection outcomes remains poorly understood. Here, we find that restricted phage infection potentiates immunity by inducing an increase in immune protein abundance, establishing a heightened state of immunity that is critical for overcoming phage-encoded counterdefenses. This dynamic regulation is dependent on a conserved WYL domain repressor, suggesting this is a widespread strategy in bacterial immunity. In contrast, productive phage infection triggers the horizontal transfer of the mobile element carrying the immune system, ensuring its persistence within the bacterial population. Finally, we demonstrate that harnessing this regulatory logic provides a powerful genetic tool for identifying phages that encode counterdefenses. Together, our work reveals that the fate of an infection dictates divergent outcomes for the expression and dissemination of bacterial immunity.