Non-coding small RNAs (sRNAs) regulate various cellular processes in bacteria. They bind to a chaperone protein Hfq for stability and regulate gene expression by base-pairing with target mRNAs. Although the importance of sRNAs in bacteria has been well established, the mode of origination of novel sRNA genes is still elusive, mainly because the rapid rate of evolution of sRNAs obscures their original sources. To overcome this impediment, we identified a recently formed sRNA (EcsR2) in E. coli, and show that it evolved from a degraded bacteriophage gene. Our analyses also revealed that young sRNAs such as EcsR2 are expressed at low levels and evolve at a rapid rate in comparison to older sRNAs, thereby uncovering a novel process that potentially facilitates newly emerging (and probably mildly deleterious) sRNAs to persist in bacterial genomes. We also show that even though EcsR2 is slightly deleterious to E. coli, it could bind to Hfq and mRNAs to regulate the expression of several genes. Interestingly, while EcsR2 expression is induced by glucose, the expression of its putative targets are regulated by the transcription factor CRP in response to glucose, indicating that EcsR2 has been incorporated into the carbon regulatory network in E. coli. Collectively, this work provides evidence for the emergence, evolution and functions of a novel ‘young’ sRNA in bacteria.