We present a new methodology for computational analysis of gene and protein networks. The aim is to generate new educated hypotheses on gene functions and on the logic of the biological network circuitry, based on gene expression profiles. The framework supports the incorporation of biologically motivated network constraints and rules to improve specificity. Since current data is insufficient for de-novo reconstruction, the method receives as input a known pathway core and suggests likely expansions to it. Network modeling is combinatorial, yet data can be probabilistic. At the heart of the approach are a fitness function which estimates the quality of suggested network expansions given the core and the data, and a specificity measure of the expansions. The approach has been implemented in an interactive software tool called GENESYS. We report encouraging results in preliminary analysis of yeast ergosterol pathway based on transcription profiles. In particular, the analysis suggests a novel ergosterol transcription factor.