While the construction of fusion or tagged proteins is a useful method to obtain bifunctional proteins such as enzymes with specific binding activities, the region of the protein amenable to the fusion is limited to either the N- or C-terminus of the polypeptide, which often hampers its utility. Here we propose circular permutation as a method for tethering other protein(s) at a site(s) other than the two termini. As the effect of circular permutation on the activity of practically important proteins remains to be established, Escherichia coli alkaline phosphatase was subjected to circular permutation with its novel termini at the loops near the active site, and the original termini were linked by a flexible linker. While a permutant with the termini at original residues 407 and 408 was not active, a permutant with termini at residues 90 and 94 showed significant activity. Also, the addition of a randomized residue at positions 91 and 93 as well as outer peptide epitopes yielded several mutants with specific activity comparable to the wild-type enzyme with similar outer peptides. In addition, the mutants retained specific binding activity to anti-epitope antibodies, showing their potential utility in competitive immunoassay.