Streptococcus pneumoniae (pneumococcus) is a leading cause of death and disease in children and elderly. Genetic variability among isolates from this species is high. These differences, often the product of gene loss or gene acquisition via horizontal gene transfer, can endow strains with new molecular pathways, diverse phenotypes, and ecological advantages. PMEN1 is a widespread and multidrug-resistant pneumococcal lineage. Using comparative genomics we have determined that a regulator-peptide signal transduction system, TprA2/PhrA2, was acquired by a PMEN1 ancestor and is encoded by the vast majority of strains in this lineage. We show that TprA2 is a negative regulator of a PMEN1-specific gene encoding a lanthionine-containing peptide (lcpA). The activity of TprA2 is modulated by its cognate peptide, PhrA2. Expression of phrA2 is density-dependent and its C-terminus relieves TprA2-mediated inhibition leading to expression of lcpA. In the pneumococcal mouse model with intranasal inoculation, TprA2 had no effect on nasopharyngeal colonization but was associated with decreased lung disease via its control of lcpA levels. Furthermore, the TprA2/PhrA2 system has integrated into the pneumococcal regulatory circuitry, as PhrA2 activates TprA/PhrA, a second regulator-peptide signal transduction system widespread among pneumococci. Extracellular PhrA2 can release TprA-mediated inhibition, activating expression of TprA-repressed genes in both PMEN1 cells as well as another pneumococcal lineage. Acquisition of TprA2/PhrA2 has provided PMEN1 isolates with a mechanism to promote commensalism over dissemination and control inter-strain gene regulation.