As a step toward selecting folded proteins from libraries of randomized sequences, we have designed a 'loop entropy reduction'-based phage-display method. The basic premise is that insertion of a long disordered sequence into a loop of a host protein will substantially destabilize the host because of the entropic cost of closing a loop in a disordered chain. If the inserted sequence spontaneously folds into a stable structure with the N and C termini close in space, however, this entropic cost is diminished. The host protein function can, therefore, be used to select folded inserted sequences without relying on specific properties of the inserted sequence. This principle is tested using the IgG binding domain of protein L and the lck SH2 domain as host proteins. The results indicate that the loop entropy reduction screen is capable of discriminating folded from unfolded sequences when the proper host protein and insertion point are chosen.