A major challenge faced by Vibrio cholerae is constant predation by bacteriophage (phage) in aquatic reservoirs and during infection of human hosts. To overcome phage predation, V. cholerae has acquired and/or evolved a myriad of phage defense systems. Although several novel defense systems have been discovered, we hypothesized that more were encoded in V. cholerae given the low diversity of phages that have been isolated, which infect this species. Using a V. cholerae genomic library, we identified a Type IV restriction system consisting of two genes within a 16-kB region of the Vibrio pathogenicity island-2, which we name TgvA and TgvB (Type I-embedded gmrSD-like system of VPI-2). We show that both TgvA and TgvB are required for defense against T2, T4, and T6 by targeting glucosylated 5-hydroxymethylcytosine (5hmC). T2 or T4 phages that lose the glucose modifications are resistant to TgvAB defense but exhibit a significant evolutionary tradeoff, becoming susceptible to other Type IV restriction systems that target unglucosylated 5hmC. We also show that the Type I restriction-modification system that embeds the tgvAB genes protects against phage T3, secΦ18, secΦ27, and λ, suggesting that this region is a phage defense island. Our study uncovers a novel Type IV restriction system in V. cholerae, increasing our understanding of the evolution and ecology of V. cholerae, while highlighting the evolutionary interplay between restriction systems and phage genome modification.IMPORTANCEBacteria are constantly being predated by bacteriophage (phage). To counteract this predation, bacteria have evolved a myriad of defense systems. Some of these systems specifically digest infecting phage by recognizing unique base modifications present on the phage DNA. In this study, we discover a Type IV restriction system encoded in V. cholerae, which we name TgvAB, and demonstrate it recognizes and restricts phage that have 5-hydroxymethylcytosine glucosylated DNA. Moreover, the evolution of resistance to TgvAB render phage susceptible to other Type IV restriction systems, demonstrating a significant evolutionary tradeoff. These results enhance our understanding of the evolution of V. cholerae and more broadly how bacteria evade phage predation.