DNA shuffling is a method for in vitro homologous recombination of pools of selected mutant genes by random fragmentation and polymerase chain reaction (PCR) reassembly. Computer simulations called genetic algorithms have demonstrated the importance of iterative homologous recombination for sequence evolution. Oligonucleotide cassette mutagenesis and error-prone PCR are not combinatorial and thus are limited in searching sequence space. We have tested mutagenic DNA shuffling for molecular evolution in a beta-lactamase model system. Three cycles of shuffling and two cycles of backcrossing with wild-type DNA, to eliminate non-essential mutations, were each followed by selection on increasing concentrations of the antibiotic cefotaxime. We report here that selected mutants had a minimum inhibitory concentration of 640 micrograms ml-1, a 32,000-fold increase and 64-fold greater than any published TEM-1 derived enzyme. Cassette mutagenesis and error-prone PCR resulted in only a 16-fold increase.