Many pathogens transmit to new hosts by both infection (horizontal transmission) and transfer to the infected host's offspring (vertical transmission). These two transmission modes require specific adaptations of the pathogen that can be mutually exclusive, resulting in a trade-off between horizontal and vertical transmission. We show that in mathematical models such trade-offs can lead to the simultaneous existence of two evolutionary stable states (evolutionary bi-stability) of allocation of resources to the two modes of transmission. We also show that jumping between evolutionary stable states can be induced by gradual environmental changes. Using quantitative PCR-based estimates of abundance in seed and vegetative parts, we show that the pathogen of wheat, Phaeosphaeria nodorum, has jumped between two distinct states of transmission mode twice in the past 160 years, which, based on published evidence, we interpret as adaptation to environmental change. The finding of evolutionary bi-stability has implications for human, animal and other plant diseases. An ill-judged change in a disease control programme could cause the pathogen to evolve a new, and possibly more damaging, combination of transmission modes. Similarly, environmental changes can shift the balance between transmission modes, with adverse effects on human, animal and plant health.