Rational design of protein structure requires the identification of optimal sequences to carry out a particular function within a given backbone structure. A general solution to this problem requires that a potential function describing the energy of the system as a function of its atomic coordinates be minimized simultaneously over all available sequences and their three-dimensional atomic configurations. Here we present a method that explicitly minimizes a semiempirical potential function simultaneously in these two spaces, using a simulated annealing approach. The method takes the fixed three-dimensional coordinates of a protein backbone and stochastically generates possible sequences through the introduction of random mutations. The corresponding three-dimensional coordinates are constructed for each sequence by "redecorating" the backbone coordinates of the original structure with the corresponding side chains. These are then allowed to vary in their structure by random rotations around free torsional angles to generate a stochastic walk in configurational space. We have named this method protein simulated evolution, because, in loose analogy with natural selection, it randomly selects for allowed solutions in the sequence of a protein subject to the "selective pressure" of a potential function. Energies predicted by this method for sequences of a small group of residues in the hydrophobic core of the phage lambda cI repressor correlate well with experimentally determined biological activities. This "genetic selection by computer" approach has potential applications in protein engineering, rational protein design, and structure-based drug discovery.