Abstract Background The rapid development of structural genomics has resulted in many "unknown function" proteins being deposited in Protein Data Bank (PDB), thus, the functional prediction of these proteins has become a challenge for structural bioinformatics. Several sequence-based and structure-based methods have been developed to predict protein function, but these methods need to be improved further, such as, enhancing the accuracy, sensitivity, and the computational speed. Here, an accurate algorithm, the CMASA (Contact MAtrix based local Structural Alignment algorithm), has been developed to predict unknown functions of proteins based on the local protein structural similarity. This algorithm has been evaluated by building a test set including 164 enzyme families, and also been compared to other methods. Results The evaluation of CMASA shows that the CMASA is highly accurate (0.96), sensitive (0.86), and fast enough to be used in the large-scale functional annotation. Comparing to both sequence-based and global structure-based methods, not only the CMASA can find remote homologous proteins, but also can find the active site convergence. Comparing to other local structure comparison-based methods, the CMASA can obtain the better performance than both FFF (a method using geometry to predict protein function) and SPASM (a local structure alignment method); and the CMASA is more sensitive than PINTS and is more accurate than JESS (both are local structure alignment methods). The CMASA was applied to annotate the enzyme catalytic sites of the non-redundant PDB, and at least 166 putative catalytic sites have been suggested, these sites can not be observed by the Catalytic Site Atlas (CSA). Conclusions The CMASA is an accurate algorithm for detecting local protein structural similarity, and it holds several advantages in predicting enzyme active sites. The CMASA can be used in large-scale enzyme active site annotation. The CMASA can be available by the mail-based server ( http://159.226.149.45/other1/CMASA/CMASA.htm ).