Curli are adhesive fimbriae of Enterobactericaeae and are involved in surface attachment, cell aggregation, and biofilm formation. We reported previously that curli-producing (C(+)) variants of E. coli O157:H7 (EcO157) were much more acid sensitive than their corresponding curli-deficient (C(-)) variants; however, this difference was not linked to the curli fimbriae per se. Here, we investigated the underlying molecular basis of this phenotypic divergence. We identified large deletions in the rcsB gene of C(+) variants isolated from the 1993 U.S. hamburger-associated outbreak strains. rcsB encodes the response regulator of the RcsCDB two-component signal transduction system, which regulates curli biogenesis negatively but acid resistance positively. Further comparison of stress fitness revealed that C(+) variants were also significantly more sensitive to heat shock but were resistant to osmotic stress and oxidative damage, similar to C(-) variants. Transcriptomics analysis uncovered a large number of differentially expressed genes between the curli variants, characterized by enhanced expression in C(+) variants of genes related to biofilm formation, virulence, catabolic activity, and nutrient uptake but marked decreases in transcription of genes related to various types of stress resistance. Supplying C(+) variants with a functional rcsB restored resistance to heat shock and acid challenge in cells but blocked curli production, confirming that inactivation of RcsB in C(+) variants was the basis of fitness segregation within the EcO157 population. This study provides an example of how genome instability of EcO157 promotes intrapopulation diversification, generating subpopulations carrying an array of distinct phenotypes that may confer the pathogen with survival advantages in diverse environments.