Background: Proteins that are similar in sequence or structure may perform different functions in nature. In such cases, function cannot be inferred from sequence or structural similarity. Results: We analyzed experimental structures belonging to the Structural Classification of Proteins (SCOP) database and showed that about half of them belong to multi-functional fold families for which protein similarity alone is not adequate to assign function. We also analyzed predicted structures from the LiveBench and the PDB-CAFASP experiments and showed that accurate homology-based functional assignments cannot be achieved approximately one third of the time, when the protein is a member of a multi-functional fold family. We then conducted extended performance evaluation and comparisons on both experimental and predicted structures using our Functional Signatures from Structural Alignments (FSSA) algorithm that we previously developed to handle the problem of classifying proteins belonging to ...