Transposable elements (TEs) are genomic parasites that impose fitness costs on their hosts by producing deleterious mutations and disrupting gametogenesis. Host genomes avoid these costs by regulating TE activity, particularly in germline cells where new insertions are heritable and TEs are exceptionally active. However, the capacity of different TE-associated fitness costs to select for repression in the host, and the role of selection in the evolution of TE regulation more generally, remain controversial. In this study, we use individual-based simulations to examine the evolution of TE regulation through small RNA-mediated silencing. Small RNA silencing is a common mechanism for TE regulation employed by both prokaryotes and eukaryotes. We observed that even under conservative assumptions, where small RNA-mediated regulation reduces transposition only, repression evolves rapidly and adaptively after the genome is invaded by a new TE. We further show that the spread of repressor alleles is greatly enhanced by two additional TE-imposed fitness costs: dysgenic sterility and ectopic recombination. Finally, we demonstrate that the mutation rate to repression (i.e., the size of the mutational target) is a critical parameter that influences both the evolutionary trajectory of host repression and the associated proliferation of TEs. Our findings suggest that adaptive evolution of TE regulation may be stronger and more prevalent than previously suggested, and complement recent empirical observations of positive selection on small RNA-mediated repressor alleles.