Survival of M. tuberculosis within the host macrophages requires presence of the virulence regulator PhoP, but the underlying mechanism is yet to be understood. We discovered a signalling pathway which controls mycobacterial cAMP-inducible gene expression and cAMP homeostasis. We show that the level of intra-mycobacterial cAMP, one of the most widely used second messengers, is regulated by the virulence regulator PhoP, which recruits the cAMP responsive protein, CRP. We provide evidence to show that PhoP -dependent repression of cAMP specific phosphodiesterase Rv0805, which degrades cAMP hydrolytically, accounts for mycobacterial cAMP homeostasis. In keeping with these findings, genetic manipulation to inactivate PhoP-Rv0805-cAMP pathway leads to disruption of cAMP homeostasis, increased stress sensitivity and most critically, reduced mycobacterial survival in macrophages and animal models. Together, PhoP-dependent cAMP inducible gene expression and cAMP homeostasis represent a molecular checkpoint during intra-phagosomal survival and growth program of mycobacteria.