The high affinity binding interaction of biotin to avidin or streptavidin has been used widely in biochemistry and molecular biology, often in sensitive protein detection or protein capture applications. However, in vitro chemical techniques for protein biotinylation are not always successful, with some common problems being a lack of reaction specificity, inactivation of amino acid residues critical for protein function and low levels of biotin incorporation. This report describes an improved expression system for the highly specific and quantitative in vivo biotinylation of fusion proteins. A short 'biotinylation peptide', described previously by Schatz, is linked to the N-terminus of Escherichia coli thioredoxin (TrxA) to form a new protein, called BIOTRX. The 'biotinylation peptide' serves as an in vivo substrate mimic for E. coli biotin holoenzyme synthetase (BirA), an enzyme which usually performs highly selective biotinylation of E.coli biotin carboxyl carrier protein (BCCP). A plasmid expression vector carrying the BIOTRX and birA genes arranged as a bacterial operon can be used to obtain high level production of soluble BIOTRX and BirA proteins and, under appropriate culture conditions, BIOTRX protein produced by this system is completely biotinylated. Fusions of BIOTRX to other proteins or peptides, whether these polypeptides are linked to the C-terminus or inserted into the BIOTRX active site loop, are also quantitatively biotinylated. Both types of BIOTRX fusion can be captured efficiently on avidin/streptavidin media for purification purposes or to facilitate interaction assays. We illustrate the utility of the system by measurements of antibody and soluble receptor protein binding to BIOTRX fusions immobilized on streptavidin-conjugated BIAcore chips.