The application of a new encoding technology for drug discovery is described. A combinatorial library of mercaptoacyl pyrrolidines has been prepared on a beaded polymeric support. Each polymer bead carries one library constituent in association with an oligomeric "tag," the structure of which is a record of the specific reagents from which that library member was prepared. After the ligands were solubilized, an array of such beads was screened for angiotensin-converting enzyme inhibitory activity, and the structures of active pyrrolidines were deduced by analysis of the associated tags at sub-picomole levels. Several extremely potent enzyme inhibitors were identified, many from multiple beads. The most potent inhibitor was found to have a Ki of 160 pM, approximately 3-fold more active than captopril in the same assay. Direct comparison with iterative deconvolution shows that the encoded screening strategy is a much more efficient means for extracting information from such compound collections, producing more data on a larger number of active structures.