Abstract Proton cyclotron waves (PCWs), generated by the solar wind ionization and subsequent pickup of exospheric hydrogen, offer independent constraints on water loss from Mars. However, translating wave observations into quantitative escape rates has been hindered by an incomplete understanding of wave evolution, particularly the role of electron kinetics, which remained ambiguous due to inherent limitations of prior hybrid and explicit particle‐in‐cell (PIC) simulations. Using energy‐conserving semi‐implicit PIC simulations with physical speed of light and true particle masses, we demonstrate that kinetic electrons can substantially regulate the nonlinear saturation and dissipation of PCWs. This regulation is mediated through a coupled sequence involving the parametric decay into electrostatic ion acoustic waves, followed by electron Landau damping. Our findings highlight the cross‐scale impact of electrons on ion instabilities and lay the groundwork for more robust, wave‐based inferences of Mars’ water loss.