Deficits in prepulse inhibition (PPI), social defeat and social withdrawal are hallmark features of several neurological and neuropsychiatric disorders. However, the link between social environment and PPI i.e., the possible role of social defeat in driving PPI plasticity, is far from clear. Here we explored these questions in the African cichlid fish Astatotilapia burtoni, where males exist as two distinct yet reversible phenotypes. In fish communities, DOMs exhibit frequent aggressive and territorial behaviors, threatening and attacking SUBs, which respond either by engaging in fights and fleeing, or by avoiding interaction with DOMs altogether. Social phenotypes were selected using focal observations of dominant and submissive behaviors. Tests of auditory PPI showed markedly decreased PPI in SUBs as compared to DOMs at prepulse/pulse interstimulus interval of ISI 50 ms. Interestingly, further analysis showed the PPI reduction in SUBs was driven by males with low social interactivity. Testing males before and after social transitions revealed increasing and decreasing PPI in ascending and descending males, respectively. In an open field paradigm, SUBs also showed higher levels of wall hugging (thigmotaxis) and freezing when compared to DOMs i.e., an increase in anxiety-related behavior. Together the results suggest distinct yet reversible behavioral PPI phenotypes in A. burtoni males, and that social defeat drives PPI plasticity. The fact that PPI deficits are readily reversible by status change implies PPI plasticity may reflect an adaptive response to challenges in the social environment.