Cytoplasmic expression of complex eukaryotic proteins in Escherichia coli usually yields inactive protein preparations. In some cases, (part) of the biological activity can be recovered by rather inefficient denaturation-renaturation procedures. Recently, novel concepts have been developed for the expression of fully functional eukaryotic proteins in E. coli. Essential to the success of these procedures is the transport of such proteins across the inner membrane to the periplasmic space, allowing proper folding and the establishment of disulfide bonding. Subsequently, fully functional proteins can be exposed on the surface of filamentous (bacterio)phages, provided a system is employed that consists of a cloning vector (e.g. the phagemid pComb3, Barbas et al., 1991) that generates phage particles in the presence of a helper phage. The main advantage of surface display of recombinant proteins is to facilitate the screening of very large numbers of different molecules by simple selection methods (''panning''). In addition, periplasmic expression yields relatively large quantities (e.g. 1 mg l(-1) of culture) soluble protein. In this review, the principle aspects of this novel expression system based on the phagemid pComb3 will be discussed. Two examples for functional periplasmic expression of human proteins in E. coli will be presented, namely i) the antigen-binding moiety (Fab fragment) of human immunoglobulins (IgGs) and ii) the human plasminogen activator inhibitor 1, an essential regulator of the plasminogen activation system. Finally, perspectives for the application of this system to express mutant proteins, fragments of proteins and peptides are indicated.