A new method is proposed to evaluate the charge-transfer energy component of molecular interaction energy. In this method, sequential incorporation of the electrostatic, exchange, and polarization effects is followed by optimization of a compact resonance-structure-based wave function that takes into account the effect of charge transfer. In addition to the energy values, the method generates localized reactive bond orbitals, thus providing a visual link to our intuition of the nature of chemical bonding. (c) 2007 Elsevier B.V. All rights reserved.