Determination of the three-dimensional structure of a globular protein molecule from its amino acid sequence remains one of the major unsolved problems in biology. One of the crucial ingredients missing for a successful solution of this problem has been the lack of understanding of the most important of the forces involved in the process, the hydrophobic effect. We feel that we have now achieved a clear understanding of this force. The other essential ingredient is a powerful computer. However, the rapidly advancing computer technology is now at a state where one can reasonably hope to be able to tackle the folding problem. We, therefore, plan to start a program of study directly aimed at solving this problem. The basic technique we shall adopt is that of the dynamic Monte Carlo technique being pioneered by Dr. Skolnick at St. Louis. This basic technique will be modified to include rule-based generation of configurations. In the past year, I have studied an essential technical problem that has to be solved in order to use this technique for real protein molecules. It is that of efficiently generating local perturbations of a protein molecule. Currently available algorithms take several seconds to generate each local perturbations very efficiently. It involves a slight, artificial modification in the geometry of the peptide group. In the coming year, we plan to write a computer program to test this procedure. This will be the start of our protein folding study which, I expect, will take several years to complete.