It is widely hypothesized that there is a fundamental conflict between horizontal (infectious) and vertical (intergenerational) modes of parasite transmission. Activities of a parasite that increase its rate of infectious transmission are presumed to reduce its host’s fitness. This reduction in host fitness impedes vertical transmission of the parasite and thereby causes a tradeoff between horizontal and vertical transmission. Under these circumstances, and assuming no multiple infections (no within-host competition among parasites), the density of uninfected hosts in the environment should determine the optimum balance between modes of parasite transmission. When susceptible hosts are abundant, horizontal transmission is more important and simple models predict that selection should favor increased rates of horizontal transfer, even at the expense of reduced vertical transmission. Conversely, when hosts are scarce, vertical transmission is more important, which should favor increased vertical transmission even at the expense of reduced horizontal transmission. We tested the tradeoff hypothesis and key model predictions using conjugative plasmids and the bacteria that they infect. Plasmids evolved for 500 generations in environments with different densities of susceptible bacterial hosts. We observed that the plasmid’s conjugation rate increased evolutionarily at the expense of host fitness, demonstrating a systematic tradeoff between horizontal and vertical modes of plasmid transmission. Also, evolutionary reductions in conjugation rate repeatedly coincided with the loss of a particular plasmid-encoded antibiotic resistance gene. However, contrary to model predictions, susceptible host density had no significant effect on the evolution of horizontal versus vertical modes of plasmid transmission.