In the present study, we functionally analysed two yapsin genes of the thermotolerant methylotrophic yeast Hansenula polymorpha, HpYPS1 and HpYPS7, for their roles in maintaining cell wall integrity and proteolytic processing. Both HpYPS1 and HpYPS7 proteins were shown to largely localize on the cell wall via glycosylphosphatidylinositol anchor. Heterologous expression of HpYPS1 completely restored all of the growth defects of the Saccharomyces cerevisiae yps1-deletion strains, while HpYPS7 expression exhibited a limited complementation effect on the S. cerevisiae yps7-deletion strain. However, different from S. cerevisiae, deletion of the HpYPS genes generated only minor influence on the sensitivity to cell wall stress. Likewise, HpYPS1 expression was significantly induced only by a subset of stressor agents, such as sodium dodecyl sulphate and tunicamycin. HpYps1p was shown to consist of two subunits, whereas HpYps7p comprises a single long polypeptide chain. Biochemical analysis revealed that HpYps1p has much stronger proteolytic cleavage activity at basic amino acids, compared to HpYps7p. Consistent with the much higher proteolytic activity and expression level of HpYps1p compared to HpYps7p, the sole disruption of HpYPS1 was sufficient in eliminating the aberrant proteolytic cleavage of recombinant proteins secreted by H. polymorpha. The results indicate that, although their roles in the maintenance of cell wall integrity are not critical, HpYps1p and HpYps7p are functional aspartic proteases at the cell surface of H. polymorpha. Furthermore, our data present the high biotechnological potential of H. polymorpha yps1-mutant strains as hosts useful for the production of secretory recombinant proteins. Copyright © 2011 John Wiley & Sons, Ltd.