How do I evolve a Pokémon?
You just play the evolved version of that Pokémon on top of the Pokémon you want to evolve. In other words, you have to have the unevolved version already on the table and the evolved version in your hand, and then you just put the evolved version on top of the unevolved version. You can evolve an Active or a Benched Pokémon.
Source: WotC Chat (1999-09-30)