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; a.a.) and activators are typically much larger (e.g. λ cI, 237 a.a.). Indeed, 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 a.a. 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.