Transcription factors control gene expression in all life. This raises the question of what is the smallest protein that can support such activity. In nature, Cro from bacteriophage λ is one of the smallest known repressors (66 amino acids), and activators are typically much larger (e.g., λ cI, 237 amino acids). Previous efforts to engineer a minimal activator from λ Cro resulted in no activity in vivo in cells. In this study, we show that directed evolution results in a new Cro activator-repressor that functions as efficiently as λ cI in vivo. To achieve this, we develop phagemid-assisted continuous evolution (PACEmid). We find that a peptide as small as 63 amino acids functions efficiently as an activator and/or repressor. To our knowledge, this is the smallest protein activator that enables polymerase recruitment, highlighting the capacity of transcription factors to evolve from very short peptide sequences.