Motivation: Most approaches in predicting protein function from protein-protein interaction data utilize the observation that a protein often share functions with proteins that interacts with it (its level-1 neighbours). However, proteins that interact with the same proteins (i.e. level-2 neighbours) may also have a greater likelihood of sharing similar physical or biochemical characteristics. We speculate that functional similarity between a protein and its neighbours from the two different levels arise from two distinct forms of functional association, and a protein is likely to share functions with its level-1 and/or level-2 neighbours. We are interested in finding out how significant is functional association between level-2 neighbours and how they can be exploited for protein function prediction.
Results: We made a statistical study on recent interaction data and observed that functional association between level-2 neighbours is clearly observable. A substantial number of proteins are observed to share functions with level-2 neighbours but not with level-1 neighbours. We develop an algorithm that predicts the functions of a protein in two steps: (1) assign a weight to each of its level-1 and level-2 neighbours by estimating its functional similarity with the protein using the local topology of the interaction network as well as the reliability of experimental sources and (2) scoring each function based on its weighted frequency in these neighbours. Using leave-one-out cross validation, we compare the performance of our method against that of several other existing approaches and show that our method performs relatively well.