Formation of the chromophore of green fluorescent protein (GFP) depends on the correct folding of the protein. We constructed a "folding reporter" vector, in which a test protein is expressed as an N-terminal fusion with GFP. Using a test panel of 20 proteins, we demonstrated that the fluorescence of Escherichia coli cells expressing such GFP fusions is related to the productive folding of the upstream protein domains expressed alone. We used this fluorescent indicator of protein folding to evolve proteins that are normally prone to aggregation during expression in E. coli into closely related proteins that fold robustly and are fully soluble and functional. This approach to improving protein folding does not require functional assays for the protein of interest and provides a simple route to improving protein folding and expression by directed evolution.