Two proteins, barnase, the extracellular ribonuclease of Bacillus amyloliquefaciens, and barstar, its intracellular inhibitor, are being developed as a model system for the study of protein folding and protein-protein interactions. Amino acid sequence determination and X-ray structure characterization are being carried out along with thermodynamic studies of folding reactions. A peptide complementation system for barnase has been developed which will be used to investigate the roles of specific residues in both folding and enzymatic activity. An attempt is being made to transfer the structural genes for these proteins to an organism which is more amenable to genetic manipulation.