We observed the infection cycle of the temperate actinophage KC301 in relation to the growth of its host Streptomyces lividans TK24 in sterile soil microcosms. Despite a large increase in phage population following germination of host spores, there was no observable impact on host population numbers as measured by direct plate counts. The only change in the host population following infection was the establishment of a small subpopulation of KC301 lysogens. The interaction of S. lividans and KC301 in soil was analyzed with a population-dynamic mathematical model to determine the underlying mechanisms of this low susceptibility to phage attack relative to aquatic environments. This analysis suggests that the soil environment is a highly significant component of the phage-host interaction, an idea consistent with earlier observations on the importance of the environment in determining host growth and phage-host dynamics. Our results demonstrate that the accepted phage-host interaction and host life cycle, as determined from agar plate studies and liquid culture, is sufficient for quantitative agreement with observations in soil, using soil-determined rates. There are four significant effects of the soil environment: (i) newly germinated spores are more susceptible to phage lysis than are hyphae of developed mycelia, (ii) substrate mycelia in mature colonies adsorb about 98% of the total phage protecting susceptible young hyphae from infection, (iii) the burst size of KC301 is large in soil (>150, 90% confidence) relative to that observed in liquid culture (120, standard error of the mean [SEM], 6), and (iv) there is no measurable impact on the host in terms of reduced growth by the phage. We hypothesize that spatial heterogeneity is the principal cause of these effects and is the primary determinant in bacterial escape of phage lysis in soil.