Folding of beta-hairpin structures of synthetic peptides has been simulated using the molecular dynamics method with a solvent-referenced potential. Two similar sequences, Ac-MQIFVKS(D)PGKTITLKV-NH(2) and Ac-MQIFVKS(L)PGKTITLKV-NH(2), derived from the N-terminal beta-hairpin of ubiquitin, were used to study the effects of turn residues in beta-hairpin folding. The simulations were carried out for 80 ns at 297 K. With extended initial conformation, the (D)P-containing peptide folded into a stable 2:2 beta-hairpin conformation with a type II' beta-turn at (D)PG. The overall beta-hairpin ratio, calculated by the DSSP algorithm, was 32.6%. With randomly generated initial conformations, the peptide also formed the stable 2:2 beta-hairpin conformation. The interactions among the side chains in the 2:2 beta-hairpin were almost identical to those in the native protein. These interactions reduced the solvation energy upon folding and stabilized the beta-hairpin conformation. Without the solvent effect, the peptide did not fold into stable beta-hairpin structures. The solvent effect is crucial for the formation of the beta-hairpin conformation. The effect of the temperature has also been studied. The (L)P-containing peptide did not fold into a stable beta-hairpin conformation and had a much lower beta-hairpin ratio (16.6%). The( L)P-containing peptide has similar favorable side-chain interactions, but the turn formed by (L)PG does not connect well with the right-handed twist of the beta-strands. For comparison, the isolated N-terminal peptide of ubiquitin, Ac-MQIFVKTLTGKTITLEV-NH(2), was also simulated and its beta-hairpin ratio was low, indicating that the beta-hairpin in the native structure is stabilized by the interaction with the protein environment. These simulation results agreed qualitatively with the available experimental findings.