We have engineered the phage displayed TEM-1 beta-lactamase to generate enzymes that can be used in homogeneous immunoassays because their activity can be modulated by binding to monoclonal antibodies (Mabs) raised against an unrelated protein. Random peptide libraries were genetically inserted into three loops to create hybrid enzymes with binding sites for Mabs. Insertion points were chosen to be close enough to the active site that complex formation could affect the activity. The antibiotic resistance provided by the beta-lactamase activity was used to select the clones encoding active enzymes. Biopanning of the active libraries on immobilized Mabs against the prostate specific antigen (PSA) or on streptavidin yielded enzymes with binding sites for these proteins. Their activity could be regulated by Mab or streptavidin binding. The dissociation constants of the complexes are in the 10(-9) to 10(-6) M range. In a competitive assay, PSA could be detected at a minimal concentration of 10(-9) M. The Mabs recognize mimotopes as no sequence similarity was found between inserts in regulated clones and fragments of the PSA sequence. The method can be developed to generate signaling molecules to be used for the detection of analytes in solution without identification of the epitope.