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Abstract Plasticity to reduce activity is a common way prey evade predators. However, by reducing activity prey often experience lower individual growth rates because they encounter their own prey less often. To overcome this cost, natural selection should not simply favor individuals generating stronger plasticity to reduce activity rates but also selection to resume activity once the threat of predation subsides. If such plasticity is adaptive, it should vary under environmental conditions that generate stronger selection for greater plasticity, such as predator density. Using a mesocosm experiment and observational study with a damselfly-prey/fish-predator system, we show that fish predation exerts selection for greater plasticity in activity rates of damselflies. Such selection allows damselfly activity levels to initially decrease and then rebound when the threat of predation dissipates, potentially helping to ameliorate a hypothesized growth penalty from activity reductions. We also find that the extent of plasticity in activity to the threat of fish predation increases, albeit slightly (r2 = 0.04%–0.063%), as fish densities increase across natural lakes, consistent with the idea that the magnitude of plasticity is shaped by environmental conditions underlying selection. Collectively, these results demonstrate how selection acts to drive adaptive plasticity in a common predator avoidance strategy.