We report the development of a novel method, PRED-TAT, which is capable of discriminating Sec from Tat signal peptides and predicting their cleavage sites. The method is based on Hidden Markov Models and possesses a modular architecture suitable for both Sec and Tat signal peptides. On an independent test set of experimentally verified Tat signal peptides, PRED-TAT clearly outperforms the previously proposed methods TatP and TATFIND, whereas, when evaluated as a Sec signal peptide predictor compares favorably to top-scoring predictors such as SignalP and Phobius. The method is freely available for academic users at http://www.compgen.org/tools/PRED-TAT/.