This work describes the development of a new platform for allosteric protein engineering that takes advantage of the ability of calmodulin to change conformation upon binding to peptide and protein ligands. The switch we have developed consists of a fusion protein in which calmodulin is genetically inserted into the sequence of TEM1 β-lactamase. In this approach, calmodulin acts as the input domain, whose ligand-dependent conformational changes control the activity of the β-lactamase output domain. The new allosteric enzyme exhibits up to 120 times higher catalytic activity in the activated (peptide bound) state compared to the inactive (no peptide bound) state in vitro. Activation of the enzyme is ligand-dependent—peptides with higher affinities for wild-type calmodulin exhibit increased switch activity. Calmodulin's ability to “turn on” the activity of β-lactamase makes this a potentially valuable scaffold for the directed evolution of highly specific biosensors for detecting toxins and other clinically relevant biomarkers.