In an effort to develop a bacterial expression system for horseradish peroxidase (HRP), we inserted the gene encoding HRP into the pET-22b(+) vector (Novagen) as a fusion to the signal peptide PelB. A similar construct for cytochrome c peroxidase (CcP) leads to high CcP activity in the supernatant. Expression of the wild-type HRP gene in the presence of isopropyl-beta-D-thiogalactopyranoside (IPTG) yielded no detectable activity against ABTS (azinobis(ethylbenzthiazoline sulfonate)). However, weak peroxidase activity was detected in the supernatant in the absence of IPTG. The HRP gene was subjected to directed evolution: random mutagenesis and gene recombination followed by screening in a 96-well microplate format. From 12 000 clones screened in the first generation, one was found that showed Iii-fold higher HRP activity than wild-type, amounting to similar to 110 mu g of HRP/L, which is similar to that reported from laborious in vitro refolding. No further improvement was obtained in subsequent generations of directed evolution. This level of expression has nonetheless enabled us to carry out further directed evolution to render the enzyme more thermostable and more resistant toward inactivation by H2O2. These results show that directed evolution can identify mutations that assist proteins to fold more efficiently in Escherichia coli. This approach will greatly facilitate efforts to "fine-tune" those many enzymes that are promising industrial biocatalysts, but for which suitable bacterial or yeast expression systems are currently lacking.