The combined effects of protein and solvent engineering have been studied using subtilisin BPN’ as a model protease. The effects of site-specific mutations in the active site of subtilisin BPN’ on the reactivity and substrate specificity of the enzyme are strongly dependent on the polarity of the substrate, active-site mutation, and solvent. In going from a polar solvent such as acetone to a nonpolar solvent such as hexane, subtilisin BPN’ catalysis is activated dramatically (up to 178-fold) by employing a polar active-site mutation (Gly166 --> Asn). This activation is proposed to be due to significant transition-state stabilization afforded by the polar mutation on subtilisin catalysis. Analysis of the individual kinetic and binding constants for subtilisin indicates that the polar mutation in the S1 binding site of the enzyme results in improved catalysis over the wild-type solely because of increased enzyme-substrate interaction (decreased (K(m))true). Water also effects the kinetics of subtilisin catalysis. In dry tetrahydrofuran, acylation is rate limiting. Addition of small concentrations of water to the organic solvent (<2% v/v) results in both an increased rate constant for acylation and a decreased (K(m))true. At 2% (v/v) added water and above, subtilisin reverts to a deacylation rate-limiting reaction on its ester substrates. These results suggest that water and polar mutations activate enzyme catalysis in nearly anhydrous solvents, albeit by different mechanisms, and further increase our understanding of the nature of polarity on enzyme function. From a practical standpoint, it is concluded that the effectiveness of protein engineering is strongly dependent on the solvent conditions.