The previously reported FACS-Gal assay (Nolan et al., Proc Natl Acad Sci USA 85:2603-2607, 1988) measures E. coli lacZ-encoded beta-galactosidase activity in individual viable eukaryotic cells for a variety of molecular and cellular biological applications. Enzyme activity is measured by flow cytometry, using a fluorogenic substrate, which is hydrolyzed and retained intracellularly. In this system, lacZ serves both as a reporter gene to quantitate gene expression and as a selectable marker for the fluorescence-activated sorting of cells based on their lacZ expression level. This report details the following improvements of the original assay: 1) use of phenylethyl-beta-D-thiogalactoside, a competitive inhibitor, to inhibit beta-galactosidase activity; 2) reduction of false positives by two-color measurements; and 3) inhibition of interfering mammalian beta-galactosidases by the weak base chloroquine. We found an exponential relationship between fluorescence generated by beta-galactosidase in this assay and the intracellular concentration of beta-galactosidase molecules. Finally, we report conditions for optimal loading of the substrate (FDG) and retention of the product, fluorescein. Under these conditions, we found uniform loading of FDG in all cells of a clone in individual experiments. Together, these improvements make FACS-Gal an extremely powerful tool for investigation of gene expression in eukaryotic cells.