Random mutagenesis has been used to engineer the protease subtilisin E to function in a highly nonnatural environment--high concentrations of a polar organic solvent. Sequential rounds of mutagenesis and screening have yielded a variant (PC3) that hydrolyzes a peptide substrate 256 times more efficiently than wild-type subtilisin in 60% dimethylformamide. PC3 subtilisin E and other variants containing different combinations of amino acid substitutions are effective catalysts for transesterification and peptide synthesis in dimethylformamide and other organic media. Starting with a variant containing four effective amino acid substitutions (D60N, D97G, Q103R, and N218S; where, for example, D60N represents Asp-60-->Asn), six additional mutations (G131D, E156G, N181S, S182G, S188P, and T255A) were generated during three sequential rounds of mutagenesis and screening. The 10 substitutions are clustered on one face of the enzyme, near the active site and substrate binding pocket, and all are located in loops that connect core secondary structure elements and exhibit considerable sequence variability in subtilisins from different sources. These variable surface loops are effective handles for "tuning" the activity of subtilisin. Seven of the 10 amino acid substitutions in PC3 are found in other natural subtilisins. Great variability is exhibited among naturally occurring sequences that code for similar three-dimensional structures--it is possible to make use of this sequence flexibility to engineer enzymes to exhibit features not previously developed (or required) for function in vivo.