Expression of the human cysteine proteinase inhibitor, cystatin C (CysC) in the cytoplasm of Escherichia coli was studied using a cDNA fragment encoding the cysteine proteinase inhibitor controlled by the phage λ pImage /cI857 system. The yield of CysC was low, probably due to proteolytic degradation. By fusing the cysC cDNA to a DNA fragment encoding the signal peptide of the E. coli outer membrane protein A, it was possible to produce a substantial amount of CysC in the periplasm. The processing of the signal peptide was shown to be quantitative and to result in CysC with the correct N-terminal amino acid. Yields higher than 1000 μg CysC/ml can be obtained by initiating the product formation at a moderate temperature (40 °C) late in an optimized fermentation process. A method that gives selective extraction of the periplasmic proteins and at the same time stabilizes CysC has been used.