Lytic or lysogenic infections by bacteriophages drive the evolution of enteric bacteria. Enterohemorrhagic Escherichia coli (EHEC) have recently emerged as a significant zoonotic infection of humans with the main serotypes carried by ruminants. Typical EHEC strains are defined by the expression of a type III secretion (T3S) system, the production of Shiga toxins (Stx) and association with specific clinical symptoms. The genes for Stx are present on lambdoid bacteriophages integrated into the E. coli genome. Phage type (PT) 21/28 is the most prevalent strain type linked with human EHEC infections in the United Kingdom and is more likely to be associated with cattle shedding high levels of the organism than PT32 strains. In this study we have demonstrated that the majority (90%) of PT 21/28 strains contain both Stx2 and Stx2c phages, irrespective of source. This is in contrast to PT 32 strains for which only a minority of strains contain both Stx2 and 2c phages (28%). PT21/28 strains had a lower median level of T3S compared to PT32 strains and so the relationship between Stx phage lysogeny and T3S was investigated. Deletion of Stx2 phages from EHEC strains increased the level of T3S whereas lysogeny decreased T3S. This regulation was confirmed in an E. coli K12 background transduced with a marked Stx2 phage followed by measurement of a T3S reporter controlled by induced levels of the LEE-encoded regulator (Ler). The presence of an integrated Stx2 phage was shown to repress Ler induction of LEE1 and this regulation involved the CII phage regulator. This repression could be relieved by ectopic expression of a cognate CI regulator. A model is proposed in which Stx2-encoding bacteriophages regulate T3S to co-ordinate epithelial cell colonisation that is promoted by Stx and secreted effector proteins.