Gene regulatory circuits must contend with intrinsic noise that arises due to finite numbers of proteins. While some circuits act to reduce this noise, others appear to exploit it. A striking example is the competence circuit in Bacillus subtilis, which exhibits much larger noise in the duration of its competence events than a synthetically constructed analog that performs the same function. Here, using stochastic modeling and fluorescence microscopy, we show that this larger noise allows cells to exit terminal phenotypic states, which expands the range of stress levels to which cells are responsive and leads to phenotypic heterogeneity at the population level. This is an important example of how noise confers a functional benefit in a genetic decision-making circuit.