Abstract Phenotypic variations within a population exist on different scales of biological organization and play a central role in evolution by providing adaptive capacity at the population-level. Thus, the question of how evolution generates phenotypic variation within an evolving population is fundamental in evolutionary biology. Here we address this question by performing experimental evolution of an antibiotic resistance gene, VIM-2 β-lactamase, combined with diverse biochemical assays and population genetics. We found that neutral drift, i.e. , evolution under a static environment, with a low antibiotic concentration can promote and maintain significant phenotypic variation within the population with >100-fold differences in resistance strength. We developed a model based on the phenotype-environment-fitness landscape generated with >5,000 VIM-2 variants, and demonstrated that the combination of “mutation-selection balance” and “threshold-like fitness-phenotype relationship” is sufficient to explain the generation of large phenotypic variation within the evolving population. Importantly, high-resistance conferring variants can emerge during neutral drift, without being a product of adaptation. Our findings provide a novel and simple mechanistic explanation for why most genes in nature, and by extension, systems and organisms, inherently exhibit phenotypic variation, and thus, population-level evolvability.