Antibiotic resistance is a major public health threat, further complicated by unexplained treatment failures caused by bacteria that appear antibiotic susceptible. We describe an Enterobacter cloacae isolate harbouring a minor subpopulation that is highly resistant to the last-line antibiotic colistin. This subpopulation was distinct from persisters, became predominant in colistin, returned to baseline after colistin removal and was dependent on the histidine kinase PhoQ. During murine infection, but in the absence of colistin, innate immune defences led to an increased frequency of the resistant subpopulation, leading to inefficacy of subsequent colistin therapy. An isolate with a lower-frequency colistin-resistant subpopulation similarly caused treatment failure but was misclassified as susceptible by current diagnostics once cultured outside the host. These data demonstrate the ability of low-frequency bacterial subpopulations to contribute to clinically relevant antibiotic resistance, elucidating an enigmatic cause of antibiotic treatment failure and highlighting the critical need for more sensitive diagnostics.