A number of computational tools are available for detecting signal peptides, but their abilities to locate the signal peptide cleavage sites vary significantly and are often less than satisfactory. We characterized a set of 270 secreted recombinant human proteins by automated Edman analysis and used the verified cleavage sites to evaluate the success rate of a number of computational prediction programs. An examination of the frequency of amino acid in the N-terminal region of the data set showed a preference of proline and glutamine but a bias against tyrosine. The data set was compared to the SWISS-PROT database and revealed a high percentage of discrepancies with cleavage site annotations that were computationally generated. The best program for predicting signal sequences was found to be SignalP 2.0-NN with an accuracy of 78.1% for cleavage site recognition. The new data set can be utilized for refining prediction algorithms, and we have built an improved version of profile hidden Markov model for signal peptides based on the new data.