We describe in this report that TEM-1 beta-lactamase has several desirable characteristics as a genetic reporter. First, it has no endogenous counterpart in eukaryotic cells and therefore provides a background-free measure of gene expression. Second, because of the uniqueness of the substrate cleavage reaction, a wide variety of substrates which are efficiently cleaved can be synthesized for beta-lactamase. Third, since the assays involve no more than addition of substrate to media, it is possible to continuously monitor a culture without destruction of the cells. Fourth, the enzyme is extremely versatile in that it can be fused to other proteins and retain activity. To demonstrate the versatility of beta-lactamase, we created three forms of the enzyme including secreted, intracellular, and membrane-bound forms of the enzyme, each form having distinct advantages as a reporter system. We also showed that levels of secreted beta-lactamase were proportional to both the levels of transfected DNA, beta-lactamase mRNA, as well as activity of the chloramphenicol acetyl transferase gene controlled by the same promoter, validating the reliability of this reporter. beta-Lactamase thus represents a novel and highly versatile genetic reporter. (C) 1997 Academic Press.