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Abstract Infections with Enterobacterales (E) are increasingly difficult to treat due to antimicrobial resistance. After ceftriaxone replaced chloramphenicol (CHL) as empiric therapy for suspected sepsis in Malawi in 2004, extended-spectrum beta-lactamase (ESBL)-E rapidly emerged. Concurrently, resistance to CHL in Escherichia coli and Klebsiella spp. decreased, raising the possibility of CHL re-introduction. However, many phenotypically susceptible isolates still carry CHL acetyltransferase (cat) genes. To understand the molecular mechanisms and stability of this re-emerging CHL susceptibility we use a combination of genomics, phenotypic susceptibility assays, experimental evolution, and functional assays for CAT activity. Here, we show that of 840 Malawian E. coli and Klebsiella spp. isolates, 31% have discordant CHL susceptibility genotype–phenotype, and we select a subset of 42 isolates for in-depth analysis. Stable degradation of cat genes by insertion sequences leads to re-emergence of CHL susceptibility. Our study suggests that CHL could be reintroduced as a reserve agent for critically ill patients with ESBL-E infections in Malawi and similar settings and highlights the ongoing challenges in inferring antimicrobial resistance from sequence data.