Multicellular organisms appeared on Earth through several independent major evolutionary transitions. Are such transitions reversible? Addressing this fundamental question entails understanding the benefits and costs of multicellularity versus unicellularity. For example, some wild yeast strains form multicellular clumps, which might be beneficial in stressful conditions, but this has been untested. Here we show that unicellular yeast evolves from clump-forming ancestors by propagating samples from suspension after larger clumps have settled. Unicellular yeast strains differed from their clumping ancestors mainly by mutations in the AMN1 (Antagonist of Mitotic exit Network) gene. Ancestral yeast clumps were more resistant to freeze/thaw, hydrogen peroxide, and ethanol stressors than their unicellular counterparts, while unicellularity was advantageous without stress. These findings inform mathematical models, jointly suggesting a trade-off between the benefits and downsides of multicellularity, causing bet-hedging by regulated phenotype switching as a survival strategy in unexpected stress.