We analyzed the thermodynamic basis for improvement of a binding protein by disulfide engineering. The Z(SPA-1) affibody binds to its Z domain binding partner with a dissociation constant K-d = 1.6 mu M, and previous analyses suggested that the moderate \affinity is due to the conformational heterogeneity of free Z(SPA-1) rather than to a suboptimal binding interface. Studies of five stabilized Z(SPA-1) double cystein mutants show that it is possible to improve the affinity by an order of magnitude to K-d = 130 nM, which is close to the range (20 to 70 nM) observed with natural Z domain binders, without altering the protein-protein interface obtained by phage display. Analysis of the binding thermodynamics reveals a balance between conformational entropy and desolvation entropy: the expected and favorable reduction of conformational entropy in the best-binding Z(SPA-1) mutant is completely compensated by an unfavorable loss of desolvation entropy. This is consistent with a restriction of possible conformations in the disulfide-containing mutant and a reduction of average water-exposed nonpolar surface area in the free state, resulting in a smaller conformational entropy penalty, but also a smaller change in surface area, for binding of mutant compared to wild-type Z(SPA-1). Instead, higher Z domain binding affinity in a group of eight Z(SPA-1) variants correlates with more favorable binding enthalpy and enthalpy- entropy compensation. These results suggest that protein-protein binding affinity can be improved by stabilizing conformations in which enthalpic effects can be fully explored.