Ehrlich joined the Institute of Experimental Therapy (Institut für experimentelle Therapie) at Frankfurt am Main, Germany, in 1899, becoming the director of its research institute the Georg–Speyer Haus in 1906. Here his research focused on testing arsenical dyes for killing microbes. Arsenic was an infamous poison, and his attempt was criticised. He was publicly lampooned as an imaginary "Dr Phantasus". But Ehrlichs rationale was that the chemical structure called side chain forms antibodies that bind to toxins (such as pathogens and their products); similarly, chemical dyes such as arsenic compounds could also produce such side chains to kill the same microbes. This led him to propose a new concept called "side-chain theory". (Later in 1900, he revised his concept as "receptor theory".) Based on his new theory, he postulated that in order to kill microbes, "wir müssen chemisch zielen lernen'" ("we have to learn how to aim chemically"). 
His institute was convenient as it was adjacent to a dye factory. He began testing a number of compounds against different microbes. It was during his research that he coined the terms "chemotherapy" and "magic bullet". Although he used the German word zauberkugel in his earlier writings, the first time he introduced the English term "magic bullet" was at a Harben Lecture in London in 1908. By 1901, with the help of Japanese microbiologist Kiyoshi Shiga, Ehrlich experimented with hundreds of dyes on mice infected with trypanosome, a protozoan parasite that causes sleeping sickness. In 1904 they successfully prepared a red azo dye they called Trypan Red for the treatment of sleeping sickness.