Recent studies indicate that intrinsic promoter-mediated gene expression noise can confer a selective advantage under acute environmental stress by providing beneficial phenotypic diversity within cell populations. To investigate how extrinsic gene expression noise impacts the fitness of cell populations under stress, we engineered two nearly isogenic budding yeast strains; one carrying a two-step regulatory cascade that allows for precise control of the noise transmitted from a transcriptional regulator to a downstream stress-inducing gene, and one carrying a network with low constant upstream noise. The fitness and gene expression of these strains were compared under acute and prolonged stress exposure. Using a phenomenological modeling approach, we predicted that increased noise should confer a fitness advantage under high stress conditions, but reciprocally reduce the resistance of the population to low stress. The model also predicted that extrinsic noise might serve as a basis for phenotypic plasticity whereby gene expression distributions are modulated in response to prolonged stress. Experimentally, we confirmed the predicted differential fitness advantage of extrinsic noise under acute stress, as well as the predicted modulation of gene expression under prolonged stress. However, contrary to model predictions, strains with low and high extrinsic noise showed very similar adaptive responses to prolonged stress. This suggests that while phenotypic heterogeneity generated by noise in regulatory signals can confer increased robustness to acute stress, it is not a requirement for the observed long-term phenotypic plasticity.