AbstractT7 RNA polymerase (RNAP) is a powerful protein scaffold for the construction of synthetic biology tools and biosensors. However, both T7 RNAP and its split variants are intolerant to C‐terminal modifications or fusions, thus placing a key limitation on their engineering and deployment. Here, we use rapid continuous‐evolution approaches to evolve both full‐length and split T7 RNAP variants that tolerate modified C termini and fusions to entire other proteins. Moreover, we show that the evolved split C‐terminal RNAP variants can function as small‐molecule biosensors, even in the context of large C‐terminal fusions. This work provides a panel of modified RNAP variants with robust activity and tolerance to C‐terminal fusions, and provides insights into the biophysical requirements of the C‐terminal carboxylic acid functional group of T7 RNAP.