There is an emerging consensus that gene regulation evolves through changes in cis-regulatory elements and transcription factors. Although it is clear how nucleotide substitutions in cis-regulatory elements affect gene expression, it is not clear how amino-acid substitutions in transcription factors influence gene regulation. Here we show that amino-acid changes in the transcription factor CCAAT/enhancer binding protein-β (CEBPB, also known as C/EBP-β) in the stem-lineage of placental mammals changed the way it responds to cyclic AMP/protein kinase A (cAMP/PKA) signalling. By functionally analysing resurrected ancestral proteins, we identify three amino-acid substitutions in an internal regulatory domain of CEBPB that are responsible for the novel function. These amino-acid substitutions reorganize the location of key phosphorylation sites, introducing a new site and removing two ancestral sites, reversing the response of CEBPB to GSK-3β-mediated phosphorylation from repression to activation. We conclude that changing the response of transcription factors to signalling pathways can be an important mechanism of gene regulatory evolution.