The prediction of protein structure, based primarily on sequence and structure homology, has become an increasingly important activity. Homology models have become more accurate and their range of applicability has increased. Progress has come, in part, from the flood of sequence and structure information that has appeared over the past few years, and also from improvements in analysis tools. These include profile methods for sequence searches, the use of three-dimensional structure information in sequence alignment and new homology modeling tools, specifically in the prediction of loop and side-chain conformations. There have also been important advances in understanding the physical chemical basis of protein stability and the corresponding use of physical chemical potential functions to identify correctly folded from incorrectly folded protein conformations.