Yarrowia lipolytica DO613, carrying the xpr6-13 mutation, secretes an inactive precursor of alkaline extracellular protease that has not been cleaved after the Lys-Arg at the end of the pro-region. Compared to wild type, DO613 membrane preparations had significantly reduced ability to cleave after Lys-Arg of an artificial substrate. The XPR6 gene was cloned by complementation by screening for restoration of production of alkaline protease activity. Sequencing of a 3735 base pair SalI-SphI XPR6 fragment revealed a large open reading frame with a coding capacity of 976 amino acids (molecular weight, 110 016). The deduced amino acid sequence had significant homology to Saccharomyces cerevisiae Kex2p, a processing endoprotease that cleaves after pairs of basic amino acids. Disruption of the XPR6 gene was not lethal, but it resulted in several phenotypic changes. First, essentially no mature alkaline extracellular protease was produced indicating that the low levels produced by strains carrying previously isolated xpr6 alleles were due to leaky mutations. Second, mating type B strains carrying the disrupted XPR6 gene did not mate, but mating type A strains did. Third, the XPR6 disruption strains grew poorly on rich media at pH 5·5 and above. Cells remained physically attached after budding and continued to bud forming large dog balloon-like structures. In addition, these structures aggregated forming visible clumps in liquid culture. These growth aberrations were largely eliminated by growing cells in medium at pH 4. Fourth, no mycelial forms were observed regardless of the pH.