Phenotypic plasticity can allow organisms to respond to environmental changes by producing better matching phenotypes without any genetic change. Because of this, plasticity is predicted to be a major mechanism by which a population can survive the initial stage of colonizing a novel environment. We tested this prediction by challenging wild Drosophila melanogaster with increasingly extreme larval environments and then examining expression of alcohol dehydrogenase (ADH) and its relationship to larval survival in the first generation of encountering a novel environment. We found that most families responded in the adaptive direction of increased ADH activity in higher alcohol environments and families with higher plasticity were also more likely to survive in the highest alcohol environment. Thus, plasticity of ADH activity was positively selected in the most extreme environment and was a key trait influencing fitness. Furthermore, there was significant heritability of ADH plasticity which can allow plasticity to evolve in subsequent generations after initial colonization. The adaptive value of plasticity, however, was only evident in the most extreme environment and had little impact on fitness in less extreme environments. The results provide one of the first direct test of the adaptive role of phenotypic plasticity in colonizing a novel environment.