Engineering complex biological systems typically requires combinatorial optimization to achieve the desired functionality. Here, we present Multiplex Iterative Plasmid Engineering (MIPE), which is a highly efficient and customized method for combinatorial diversification of plasmid sequences. MIPE exploits ssDNA mediated λ Red recombineering for the introduction of mutations, allowing it to target several sites simultaneously and generate libraries of up to 10(7) sequences in one reaction. We also describe "restriction digestion mediated co-selection (RD CoS)", which enables MIPE to produce enhanced recombineering efficiencies with greatly simplified coselection procedures. To demonstrate this approach, we applied MIPE to fine-tune gene expression level in the 5-gene riboflavin biosynthetic pathway and successfully isolated a clone with 2.67-fold improved production in less than a week. We further demonstrated the ability of MIPE for highly multiplexed diversification of protein coding sequence by simultaneously targeting 23 codons scattered along the 750 bp sequence. We anticipate this method to benefit the optimization of diverse biological systems in synthetic biology and metabolic engineering.