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Mutagenesis is responsive to many environmental factors. Evolution therefore depends on the environment not only for selection but also in determining the variation available in a population. One such environmental dependency is the inverse relationship between mutation rates and population density in many microbial species. Here, we determine the mechanism responsible for this mutation rate plasticity. Using dynamical computational modelling and in culture mutation rate estimation, we show that the negative relationship between mutation rate and population density arises from the collective ability of microbial populations to control concentrations of hydrogen peroxide. We demonstrate a loss of this density-associated mutation rate plasticity (DAMP) when Escherichia coli populations are deficient in the degradation of hydrogen peroxide. We further show that the reduction in mutation rate in denser populations is restored in peroxide degradation-deficient cells by the presence of wild-type cells in a mixed population. Together, these model-guided experiments provide a mechanistic explanation for DAMP, applicable across all domains of life, and frames mutation rate as a dynamic trait shaped by microbial community composition., Competing Interests: The authors have declared that no competing interests exist., (Copyright: © 2024 Green et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.)