Tenecin 3, an antifungal protein isolated from coleopteran insect Tenebrio molitor larvae, inhibited growth of the fungus Candida albicans. We have previously reported that tenecin 3 has a propensity of random structure with very loose turn-like elements by circular dichroism (CD) analysis and 2D nuclear overhauser effect spectroscopy [Lee et al. (1999)]. However, the antifungal mechanism of tenecin-3 has not yet been studied due to its very low availability from natural sources. As an initial step to study the antifungal mechanism of tenecin 3, recombinant tenecin 3 (RT-3) obtained from an expression system in Escherichia coli showed antifungal activity against C. albicans as did natural tenecin 3. To elucidate the antifungal mechanism of RT-3 and to explore the possibility of preparing polyethylene glycol (PEG) conjugated derivative, we synthesized PEG conjugated RT-3 (RT-3-PEG) and examined its antifungal activity against C. albicans in vitro. RT-3-PEG showed greater antifungal activity against C. albicans than RT-3 alone at the same dose. When C. albicans was treated with RT-3-PEG in vitro, K+ in the C. albicans cell was leaked out rapidly compared to the C. albicans treated with RT-3 alone. When the morphological change of RT-3-PEG treated C. albicans was examined by scanning electron microscopy, string-like substances, which may have been derived from the fungus, were stacked around the cell whose wall was damaged. Also, no appreciable hemolysis of mouse erythrocytes was detected under conditions in which 1% melittin caused 100% hemolysis. These results suggested that the RT-3-PEG derivative probably does not interact with mammalian cell appreciably, although it has antifungal activity.