We designed a bacteriophage lambda system to display peptides and proteins fused at the C terminus of the head protein gpD of phage lambda. DNA encoding the foreign peptide/protein was first inserted at the 3' end of a DNA segment encoding gpD under the control of the lac promoter in a plasmid vector (donor plasmid), which also carried lox P(wt) and lox P(511) recombination sequences. Cre-expressing cells were transformed with this plasmid and subsequently infected with a recipient lambda phage that carried a stuffer DNA segment flanked by lox P(wt) and lox P(511) sites. Recombination occurred in vivo at the lox sites and Amp(r) cointegrates were formed. The cointegrates produced recombinant phage that displayed foreign protein fused at the C terminus of gpD. The system was optimised by cloning DNA encoding different length fragments of HIV-1 p24 (amino acid residues 1-72, 1-156 and 1-231) and the display was compared with that obtained with M13 phage. The display on lambda phage was at least 100-fold higher than on M13 phage for all the fragments with no degradation of displayed products. The high-density display on lambda phage was superior to that on M13 phage and resulted in selective enrichment of epitope-bearing clones from gene-fragment libraries. Single-chain antibodies were displayed in functional form on phage lambda, strongly suggesting that correct disulphide bond formation takes place during display. This lambda phage display system, which avoids direct cloning into lambda DNA and in vitro packaging, achieved cloning efficiencies comparable to those obtained with any plasmid system. The high-density display of foreign proteins on bacteriophage lambda should be extremely useful in studying low-affinity protein-protein interactions more efficiently compared to the M13 phage-based system.