PDZ domains direct protein-protein interactions and serve as models for protein design. Here, we optimized a protein design energy function for the Tiam1 and Cask PDZ domains that combines a molecular mechanics energy, Generalized Born solvent, and an empirical unfolded state model. Designed sequences were recognized as PDZ domains by the Superfamily fold recognition tool and had similarity scores comparable to natural PDZ sequences. The optimized model was used to redesign the two PDZ domains, by gradually varying the chemical potential of hydrophobic amino acids; the tendency of each position to lose or gain a hydrophobic character represents a novel hydrophobicity index. We also redesigned four positions in the Tiam1 PDZ domain involved in peptide binding specificity. The calculated affinity differences between designed variants reproduced experimental data and suggest substitutions with altered specificities.