Environmental bacteria host an enormous number of prophages, but their diversity and natural functions remain largely elusive. Here, we investigate prophage activity and diversity in 63 Erwinia and Pseudomonas strains isolated from flag leaves of wheat grown in a single field. Introducing and validating Virion Induction Profiling Sequencing (VIP-Seq), we identify and quantify the activity of 120 spontaneously induced prophages, discovering that some phyllosphere bacteria produce more than 10⁸ virions/mL in overnight cultures, with significant induction also observed in planta. Sequence analyses and plaque assays reveal E. aphidicola prophages contribute a majority of intraspecies genetic diversity and divide their bacterial hosts into antagonistic factions engaged in widespread microbial warfare, revealing the importance of prophage-mediated microdiversity. When comparing spontaneously active prophages with predicted prophages we also find insertion sequences are strongly correlated with non-active prophages. In conclusion, we discover widespread and largely unknown prophage diversity and function in phyllosphere bacteria.