The functioning of living organisms is largely dependent on the fact that each of its constituent proteins adopts a unique structure (the so- called native structure) under physiological conditions; this structure is determined by the amino-acid sequence alone. The presence of misfolded proteins (which can be caused by mutations) in the body often results in malfunction, illness and, eventually death, the best example being the prion disease (the Creutzfeld-Jakob disease in man). Understanding the role of physical interactions in the formation of the native structure will contribute to rational design of countermeasures against cancer, hereditary, and prion diseases, etc. According to Anfinsen's, thermodynamic hypothesis, the native conformation of a protein is a global-energy minimum on its free-energy hypersurface. The native structure can therefore be sought as the global minimum on this hypersurface, if an accurate potential energy function is available. For efficiency reasons, simplified models of polypeptide chains, in which each amino-acid residue is represented by one or a few interaction sites rather than all-atom resolution models, must be used. While our previous focus was on global optimization methods, we now focus on our physics-based united-residue (UNRES) potential-energy function. The main goal is to predict the structures of proteins of all major structural classes (alpha, beta, alpha+beta, and alpha/beta) with chain lengths of up to 250 amino-acid residues within 4-6Angstroms root mean square deviation based solely on global optimization of the potential energy. This will be accomplished by improving the functional forms and parameters of individual energy components and assuring the folding property of the potential by optimizing the total energy function to reflect the energetic hierarchy of partially unfolded structures. In addition to this, work on the techniques for searching the conformational space at the united-residue level will be continued, and a molecular dynamics code for UNRES will be designed. The final UNRES energy function will not only be a useful tool for ab initio protein structure prediction, but also for studying protein folding pathways on a microsecond time scale.