A fundamental feature of immune systems is the ability to distinguish pathogenic from self and commensal elements, and to attack the former but tolerate the latter. Prokaryotic CRISPR-Cas immune systems defend against phage infection by using Cas nucleases and small RNA guides that specify one or more target sites for cleavage of the viral genome. Temperate phages include viruses that can integrate into the bacterial chromosome, and they can carry genes that provide a fitness advantage to the lysogenic host. However, CRISPR-Cas targeting that relies strictly on DNA sequence recognition provides indiscriminate immunity both to lytic and lysogenic infection by temperate phages-compromising the genetic stability of these potentially beneficial elements altogether. Here we show that the Staphylococcus epidermidis CRISPR-Cas system can prevent lytic infection but tolerate lysogenization by temperate phages. Conditional tolerance is achieved through transcription-dependent DNA targeting, and ensures that targeting is resumed upon induction of the prophage lytic cycle. Our results provide evidence for the functional divergence of CRISPR-Cas systems and highlight the importance of targeting mechanism diversity. In addition, they extend the concept of 'tolerance to non-self' to the prokaryotic branch of adaptive immunity.