We present a novel protein-ligand docking method that accurately accounts for both ligand and receptor flexibility by iteratively combining rigid receptor docking (Glide) with protein structure prediction (Prime) techniques. While traditional rigid-receptor docking methods are useful when the receptor structure does not change substantially upon ligand binding, success is limited when the protein must be "induced" into the correct binding conformation for a given ligand. We provide an in-depth description of our novel methodology and present results for 21 pharmaceutically relevant examples. Traditional rigid-receptor docking for these 21 cases yields an average RMSD of 5.5 A. The average ligand RMSD for docking to a flexible receptor for the 21 pairs is 1.4 A; the RMSD is < or =1.8 A for 18 of the cases. For the three cases with RMSDs greater than 1.8 A, the core of the ligand is properly docked and all key protein/ligand interactions are captured.