In host–pathogen arms races, increases in host resistance prompt counteradaptation by pathogens, but the nature of that counteradaptation is seldom directly observed outside of laboratory models. The best-documented field example is the coevolution of myxoma virus (MYXV) in European rabbits. To understand how MYXV in Australia has continued to evolve in wild rabbits under intense selection for genetic resistance to myxomatosis, we compared the phenotypes of the progenitor MYXV and viral isolates from the 1950s and the 1990s in laboratory rabbits with no resistance. Strikingly, and unlike their 1950s counterparts, most virus isolates from the 1990s induced a highly lethal immune collapse syndrome similar to septic shock. Thus, the next step in this canonical case of coevolution after a species jump has been further escalation by the virus in the face of widespread host resistance.