Site-specific modification of proteins and peptides with reporter molecules provides a powerful research tool in chemistry and biology. We report the synthesis and application of a tyrosine analogue, N-alpha-Fmoc-3-acetyl-L-tyrosine, for selective modification of proteins. As a model system, we synthesized the human immunodeficiency virus type 1 (HIV-1) Tat peptide (amino acids 47-56) containing the arginine rich RNA-binding region and replaced the Tyr-47 with 3-acetyl-tyrosine. The acetyl-Tyr-Tat peptide was subsequently labeled with a fluorescein derivative to study RNA-protein interactions by fluorescence energy transfer experiments. Our results showed that the Tat peptide binds to the rhodamine labeled TAR RNA with a dissociation constant (KD) of 1.0 +/- 0.5 nM. This strategy of selective protein modification offers a versatile new procedure for labeling peptides of biological interest at a desired site when several nucleophilic side chains of lysine and cysteine are present. These methods would provide tools for postsynthetic peptide modification and introducing biophysical probes for structural and functional analysis of proteins.