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Retrons are toxin-antitoxin systems protecting bacteria against bacteriophages via abortive infection. The Retron-Eco1 antitoxin is formed by a reverse transcriptase (RT) and a non-coding RNA (ncRNA)/multi-copy single-stranded DNA (msDNA) hybrid that neutralizes an uncharacterized toxic effector. Yet, the molecular mechanisms underlying phage defense remain unknown. Here, we show that the N -glycosidase effector, which belongs to the STIR superfamily, hydrolyzes NAD+ during infection. Cryoelectron microscopy (cryo-EM) analysis shows that the msDNA stabilizes a filament that cages the effector in a low-activity state in which ADPr, a NAD+ hydrolysis product, is covalently linked to the catalytic E106 residue. Mutations shortening the msDNA induce filament disassembly and the effector's toxicity, underscoring the msDNA role in immunity. Furthermore, we discovered a phage-encoded Retron-Eco1 inhibitor (U56) that binds ADPr, highlighting the intricate interplay between retron systems and phage evolution. Our work outlines the structural basis of Retron-Eco1 defense, uncovering ADPr's pivotal role in immunity. [Display omitted] • Retron-Eco1 assembles NAD+-hydrolyzing filaments at cellular NAD+ concentrations • The filaments trap the effector in a non-toxic catalytic intermediate state • Retron-Eco1 leads to NAD+ depletion upon phage infection • U56 is a phage-encoded inhibitor that binds the NAD+ hydrolysis product ADPr Retrons are bacterial immune systems against their parasites (bacteriophages). Carabias et al. explore the immune mechanism of Retron-Eco1, showing that it forms filaments that consume NAD+ during infection. The authors also shed light on the mechanisms of bacteriophage immune evasion by finding a bacteriophage-encoded inhibitor that binds an NAD+-related molecule. [ABSTRACT FROM AUTHOR]