Microbes are faced with environmental fluctuations and it is therefore important to understand how change affects bacterial evolution and population dynamics. Here, we evolved a model bacterium, Pseudomonas aeruginosa PA14, under both constant and changing conditions where settlement by biofilm formation or migration by swimming motility was induced. In changing environments, a heterogeneous population evolved with both specialists and generalists. Interestingly, over time, generalists were outcompeted despite being better at both phenotypes compared to the ancestor. However, generalists became dominant when faced with local competition after resettlement. Reintroduction into a burn wound model, the environment PA14 originally was isolated from, further suggested a tradeoff between niche breadth and peak fitness in agreement with the evolution experiments. Mutations in the c-di-GMP system were key for adaptation of the phenotypes. No mutants lost their ability to regulate c-di-GMP, but generalists acquired mutations that optimized their phenotypic response by efficiently adjusting c-di-GMP levels.