Cellular adaptation relies on the development of proper regulatory schemes for accurate control of gene expression levels in response to environmental cues. Over- or under-expression can lead to diminished cell fitness due to increased costs or insufficient benefits. Positive autoregulation is a common regulatory scheme that controls protein expression levels and gives rise to essential features in diverse signaling systems, yet its roles in cell fitness are less understood. It remains largely unknown how much protein expression is 'appropriate' for optimal cell fitness under specific extracellular conditions and how the dynamic environment shapes the regulatory scheme to reach appropriate expression levels. Here, we investigate the correlation of cell fitness and output response with protein expression levels of the E. coli PhoB/PhoR two-component system (TCS). In response to phosphate (Pi)-depletion, the PhoB/PhoR system activates genes involved in phosphorus assimilation as well as genes encoding themselves, similarly to many other positively autoregulated TCSs. We developed a bacteria competition assay in continuous cultures and discovered that different Pi conditions have conflicting requirements of protein expression levels for optimal cell fitness. Pi-replete conditions favored cells with low levels of PhoB/PhoR while Pi-deplete conditions selected for cells with high levels of PhoB/PhoR. These two levels matched PhoB/PhoR concentrations achieved via positive autoregulation in wild-type cells under Pi-replete and -deplete conditions, respectively. The fitness optimum correlates with the wild-type expression level, above which the phosphorylation output saturates, thus further increase in expression presumably provides no additional benefits. Laboratory evolution experiments further indicate that cells with non-ideal protein levels can evolve toward the optimal levels with diverse mutational strategies. Our results suggest that the natural protein expression levels and feedback regulatory schemes of TCSs are evolved to match the phosphorylation output of the system, which is determined by intrinsic activities of TCS proteins.