Recently, natural variants of TEM-1 beta-lactamase with amino acid substitutions at residues 237-240 have been identified that have increased hydrolytic activity for extended-spectrum antibiotics such as ceftazidime. To identify the sequence requirements in this region for a given antibiotic, a random library was constructed that contained all possible amino acid combinations for the 3-residue region 237-240 (ABL numbering system) of TEM-1 beta-lactamase. An antibiotic disc diffusion method was used to select mutants with wild-type level activity or greater for the extended-spectrum cephalosporin ceftazidime and the monobactam aztreonam. Mutants that were selected for optimal ceftazidime hydrolysis contained a conserved Ala at position 237, a Ser for Gly substitution at position 238, and a Lys for Glu at position 240. Mutants selected for aztreonam hydrolysis exhibited a Gly for Ala substitution at position 237, a Ser for Gly substitution at position 238, and a Lys/Arg for Glu at position 240. The role of the A237G substitution in differentiating between ceftazidime and aztreonam was further investigated by kinetic analysis of the A237G, E240K, G238S:E240K, and A237G:G238S:E240K enzymes. The A237G single mutant and the G238S:E240K double mutant exhibited increases in catalytic efficiency for both ceftazidime and aztreonam. However, the triple mutant A237G:G238S:E240K, displayed a 12-fold decrease in catalytic efficiency for ceftazidime but a 3-fold increase for aztreonam relative to the G238S:E240K double mutant. Thus, the A237G substitution increases ceftazidime hydrolysis when present alone but antagonizes ceftazidime hydrolysis when it is combined with the G238S:E240K substitutions. In contrast, the A237G substitution acts additively with the G238S:E240K substitutions to increase aztreonam hydrolysis.