A new approach, MOBILE, is presented that models protein binding-sites including bound ligand molecules as restraints. Initially generated, homology models of the target protein are refined iteratively by including information about bioactive ligands as spatial restraints and optimising the mutual interactions between the ligands and the binding-sites. Thus optimised models can be used for structure-based drug design and virtual screening. In a first step, ligands are docked into an averaged ensemble of crude homology models of the target protein. In the next step, improved homology models are generated, considering explicitly the previously placed ligands by defining restraints between protein and ligand atoms. These restraints are expressed in terms of knowledge-based distance-dependent pair potentials, which were compiled from crystallographically determined protein-ligand complexes. Subsequently, the most favourable models are selected by ranking the interactions between the ligands and the generated pockets using these potentials. Final models are obtained by selecting the best-ranked side-chain conformers from various models, followed by an energy optimisation of the entire complex using a common force-field. Application of the knowledge-based pair potentials proved efficient to restrain the homology modelling process and to score and optimise the modelled protein-ligand complexes. For a test set of 46 protein-ligand complexes, taken from the Protein Data Bank (PDB), the success rate of producing near-native binding-site geometries (rmsd<2.0A) with MODELLER is 70% when the ligand restrains the homology modelling process in its native orientation. Scoring these complexes with the knowledge-based potentials, in 66% of the cases a pose with rmsd <2.0A is found on rank 1. Finally, MOBILE has been applied to two case studies modelling factor Xa based on trypsin and aldose reductase based on aldehyde reductase.