We present an analysis of the protein fold recognition experiment using PROSPECT in The Third Community Wide Experiment on the Critical Assessment of Techniques for Protein Structure Prediction (CASP3). PROSPECT is a computer program we have recently developed for finding an optimal alignment between a protein sequence and a protein structural fold. Two unique features of PROSPECT are (a) that it guarantees to find the globally optimal sequence-structure alignment and does so in an efficient manner, when the alignment-scoring function consists of three additive terms: (i) a singleton fitness term, (ii) a pairwise contact preference term between residues that are spatially close (</=15 A between their beta-carbons) and (iii) an alignment gap penalty; and (b) that it guarantees to find the globally-optimal alignment under various constraints on the unknown protein specified by the user. In the CASP3 experiment, PROSPECT correctly identified the most similar folds for 11 targets and predicted closely-similar folds for five other targets among the 23 targets which can be classified into the category of fold-recognition problems and also had their experimentally-determined structures available. Among the 11 correctly identified folds, PROSPECT obtained good sequence-structure alignments for nine of them. On three of the five ab initio prediction problems, PROSPECT successfully located partial structures from our template library, which align accurately with the corresponding targets.