By “phenotypic plasticity” we refer to the capacity of a genotype to exhibit different phenotypes, whether in the same or in different environments. We have previously demonstrated that phenotypic plasticity can improve the degree of adaptation achieved via natural selection (Behera & Nanjundiah, 1995). That result was obtained from a genetic algorithm model of haploid genotypes (idealized as one-dimensional strings of genes) evolving in a fixed environment. Here, the dynamics of evolution is examined under conditions of a cyclically varying environment. We find that the rate of evolution, as well as the extent of adaptation (as measured by mean population fitness) is lowered because of environmental cycling. The decrease is adaptation caused by a varying environment can, however, be partly or wholly compensated by an increase in the degree of plasticity that a genotype is capable of. Also, the reduction of population fitness caused by a variable environment can be partially offset by decreasing the total number of genetic loci. We conjecture that an increase in genome size may have been among the factors responsible for the evolution of phenotypic plasticity.