Triacetic acid lactone (TAL) is a signature byproduct of polyketide synthases (PKSs) and a valuable synthetic precursor. We have developed an endogenous TAL reporter by engineering the Escherichia coli regulatory protein AraC to activate gene expression in response to TAL. The reporter enabled in vivo directed evolution of Gerbera hybrida 2-pyrone synthase activity in E. coli. Two rounds of mutagenesis and high-throughput screening yielded a variant conferring similar to 20-fold increased TAL production. The catalytic efficiency (k(cat)/K-m) of the variant toward the substrate malonyl-CoA was improved 19-fold. This study broadens the utility of engineered AraC variants as customized molecular reporters. In addition, the TAL reporter can find applications in other basic PKS activity screens.