The 12 kDa FK506-binding protein FKBP12 is a cis-trans peptidyl-prolyl isomerase that binds the macrolides FK506 and rapamycin. We have examined the role of the binding pocket residues of FKBP12 in protein–ligand interactions by making conservative substitutions of 12 of these residues by site-directed mutagenesis. For each mutant FKBP12, we measured the affinity for FK506 and rapamycin and the catalytic efficiency in the cis–trans peptidyl-prolyl isomerase reaction. The mutation of Trp59 or Phe99 generates an FKBP12 with a significantly lower affinity for FK506 than wild-type protein. Tyr26 and Tyr82 mutants are enzymatically active, demonstrating that hydrogen bonding by these residues is not required for catalysis of the cis–trans peptidyl-prolyl isomerase reaction, although these mutations alter the substrate specificity of the enzyme. We conclude that hydrophobic interactions in the active site dominate in the stabilization of FKBP12 binding to macrolide ligands and to the twisted-amide peptidyl-prolyl substrate intermediate.