Plastic changes in organisms' phenotypes can result from either abiotic or biotic effectors. Biotic effectors create the potential for a coevolutionary dynamic. Through the use of individual-based simulations, we examined the coevolutionary dynamic of two species that are phenotypically plastic. We explored two modes of biotic and abiotic interactions: ecological interactions that determine the form of natural selection and developmental interactions that determine phenotypes. Overall, coevolution had a larger effect on the evolution of phenotypic plasticity than plasticity had on the outcome of coevolution. Effects on the evolution of plasticity were greater when the fitness-maximizing coevolutionary outcomes were antagonistic between the species pair (predator-prey interactions) than when those outcomes were augmenting (competitive or mutualistic). Overall, evolution in the context of biotic interactions reduced selection for plasticity even when trait development was responding to just the abiotic environment. Thus, the evolution of phenotypic plasticity must always be interpreted in the full context of a species' ecology. Our results show how the merging of two theory domains--coevolution and phenotypic plasticity--can deepen our understanding of both and point to new empirical research.