BACKGROUND: Protein-protein interaction information can be used to predict unknown protein functions and to help study biological pathways. RESULTS: Here we present a new approach utilizing the classic Traveling Salesman Problem to study the protein-protein interactions and to predict protein functions in budding yeast Saccharomyces cerevisiae. We apply the global optimization tool from combinatorial optimization algorithms to cluster the yeast proteins based on the global protein interaction information. We then use this clustering information to help us predict protein functions. We use our algorithm together with the direct neighbor algorithm 1 on characterized proteins and compare the prediction accuracy of the two methods. We show our algorithm can produce better predictions than the direct neighbor algorithm, which only considers the immediate neighbors of the query protein. CONCLUSION: Our method is a promising one to be used as a general tool to predict functions of uncharacterized proteins and a successful sample of using computer science knowledge and algorithms to study biological problems.