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Toxin-antitoxin (TA) systems are ubiquitous two-gene loci that bacteria use to regulate cellular processes such as phage defense. Here, we demonstrate the mechanism by which a novel type III TA system, avcID, is activated and confers resistance to phage infection. The toxin of the system (AvcD) is a deoxycytidylate deaminase that converts deoxycytidines (dC) to dexoyuridines (dU), while the RNA antitoxin (AvcI) inhibits AvcD activity. We have shown that AvcD deaminated dC nucleotides upon phage infection, but the molecular mechanism that activated AvcD was unknown. Here we show that the activation of AvcD arises from phage-induced inhibition of host transcription, leading to degradation of the labile AvcI. AvcD activation and nucleotide depletion not only decreases phage replication but also increases the formation of defective phage virions. Surprisingly, infection of phages such as T7 that are not inhibited by AvcID also lead to AvcI RNA antitoxin degradation and AvcD activation, suggesting that depletion of AvcI is not sufficient to confer protection against some phage. Rather, our results support that phage with a longer replication cycle like T5 are sensitive to AvcID-mediated protection while those with a shorter replication cycle like T7 are resistant. Author summary: Numerous diverse antiphage defense systems have been discovered in the past several years, but the mechanisms of how these systems are activated upon phage infection and why these systems protect against some phage but not others are poorly understood. The AvcID toxin-antitoxin phage defense system depletes nucleotides of the dC pool inside the host upon phage infection. We show that phage inhibition of host cell transcription activates this system by depleting the AvcI inhibitory sRNA, which inhibits production of phage and leads to the formation of defective virions. Additionally, we determined that speed of the phage replication cycle is a key factor that influences sensitivity to AvcID with faster replicating phage exhibiting resistance to its effects. This study has implications for understanding the factors that influence bacterial host/phage dynamics. [ABSTRACT FROM AUTHOR]