THE success of organisms and their increasing complexity throughout the course of evolution are thought to have depended on a small number of important transitions, one of which was the shift from a solitary lifestyle to societies of organisms exhibiting division of labour and having specialized castes(1,2). The most familiar examples of the advantages arising from division of labour and caste differentiation come from social insects(3). It has been suggested that the proportion of workers of various physical castes has evolved to enhance the fitness of colony members(4,6) with the prediction that caste ratios should vary with environmental factors such as predation, competition and food availability. However, because it has been difficult to manipulate experimentally the environmental factors believed to influence optimal caste ratio, demonstration of adaptive caste distribution has remained elusive(7-10). Here we show that colonies of the ant Pheidole pallidula increase the relative investment in soldier production after perceiving the presence of foreign conspecific colonies. This is the first experimental demonstration of a social insect altering physical caste ratios in an adaptive manner.