We use flexible backbone protein design to explore the sequence and structure neighborhoods of naturally occurring proteins. The method samples sequence and structure space in the vicinity of a known sequence and structure by alternately optimizing the sequence for a fixed protein backbone using rotamer based sequence search, and optimizing the backbone for a fixed amino acid sequence using atomic-resolution structure prediction. We find that such a flexible backbone design method better recapitulates protein family sequence variation than sequence optimization on fixed backbones or randomly perturbed backbone ensembles for ten diverse protein structures. For the SH3 domain, the backbone structure variation in the family is also better recapitulated than in randomly perturbed backbones. The potential application of this method as a model of protein family evolution is highlighted by a concerted transition to the amino acid sequence in the structural core of one SH3 domain starting from the backbone coordinates of an homologous structure.