In this study a yeast-screening system has been developed for the isolation of rarely occurring change-of-function missense mutations in defined protein segments that have potential to give more information about the function of mutated residues. Mutagenesis of cysteine-736 was chosen for this initial study because it has been shown previously, by photoaffinity labeling, to lie in close proximity to the bound hormone molecule. After randomization of residue 736 by oligonucleotide-directed mutagenesis, two functional substitutions with serine (C736S) and threonine (C736T) were found. These were further analyzed using transactivation assays in both yeast and mammalian cells and by steroid-binding assays using wild type and mutant proteins expressed in mammalian cells. The C736S protein showed reduced sensitivity to all hormones tested in transactivation assays and a reduced affinity of hormone binding. A correspondence between sensitivity to hormones in transactivation assays and hormone-binding affinity was also observed for the C736T protein. However, in this case the sensitivity to the synthetic hormone triamcinolone acetonide was higher than that for wild type whereas the sensitivity to endogenous hormones was somewhat lower. To test the efficacy of the yeast-screening system in relation to the two informative mutations identified, all 20 alternative substitutions at position 736 were constructed and analyzed. In addition to Ser and Thr, which resulted in change of function, alanine was the only other substitution that resulted in significant activity. The activity of this mutant was indistinguishable from wild type in yeast. Thus we conclude that very conservative substitutions of cysteine-736 (C736A, C736S, and C736T) cause variable effects on hormone binding that distinguish between different glucocorticoid steroid hormones.