We have developed a phage display system that provides a means to select variants of the IgG binding domain of peptostreptococcal protein L that fold from large combinatorial libraries. The premise underlying the selection scheme is that binding of protein L to IgG requires that the protein be properly folded. Using a combination of molecular biological and biophysical methods, we show that this assumption is valid. First, the phage selection procedure strongly selects against a point mutation in protein L that disrupts folding but is not in the IgG binding interface. Second, variants recovered from a library in which the first third of protein L was randomized are properly folded. The degree of sequence variation in the selected population is striking: the variants have as many as nine substitutions in the 14 residues that were mutagenized. The approach provides a selection for "foldedness" that is potentially applicable to any small binding protein.