In vitro compartmentalization (IVC) uses water-in-oil emulsions to create artificial cell-like compartments in which genes can be individually transcribed and translated. Here, we present a new application of IVC for the selection of DNA-nuclease inhibitors. We developed a nano-droplets delivery system that allows the transport of various solutes, including metal ions, into the emulsion droplets. This transport mechanism was used to regulate the activity of colicin nucleases that were co-compartmentalized with the genes, so that the nucleases were activated by nickel or cobalt ions only after the potential inhibitor genes have been translated. Thus, genes encoding nuclease inhibitors survived the digestion and were subsequently amplified and isolated. Selection is therefore directly for inhibition, and not for binding of the nuclease. The stringency of selection can be easily modulated to give high enrichments (100-500-fold) and recoveries. We demonstrated its utility by selecting libraries of the gene encoding the cognate inhibitor of colicin E9 (immunity protein 9, or Im9) for inhibition of another colicin (ColE7). The in vitro evolved inhibitors show significant inhibition of ColE7 both in vitro and in vivo. These Im9 variants carry mutations into residues that determine the selectivity of the natural counterpart (Im7) while completely retaining the residues that are conserved throughout the family of immunity protein inhibitors. The in vitro evolution process confirms earlier hypotheses regarding the "dual recognition" binding mechanism and the way in which new colicin-immunity pairs diverged from existing ones.