The extracellular production of active Rhizopus oryzae lipase (ROL) was carried out by the expression of the ProROL gene encoding a pro-form of ROL (ProROL) using prepro-a-factor in Saccharomyces cerevisiae. Two forms of recombinant ROL (rROL), rProROL by the expression of the ProROL gene and r28ROL which was a processed form of rProROL in the prosequence, were produced. Such a processing of rROL was catalyzed by the Kex2 membrane-bound endoprotease (Kex2p) in the late Golgi compartment. The ProROL and r28ROL could be produced independently as a single protein by the Kex2-engineered S. cerevisiae. Comparison of the properties of purified rROL showed that the prosequence modified some properties of ROL, and implied that the prosequence might play an physiologically important role in vivo, When only mature ROL (mROL) without the prosequence fused to the pre-alpha-factor leader sequence was expressed in S. cerevisiae, the enzyme activity was not observed in both the medium and cells. However, when the mROL was co-expressed in trans with the prosequence fused to the pre-alpha-factor leader sequence, the activity was recovered. The results showed that the prosequence may facilitate the folding of mROL, and the covalent linkage of the prosequence to the mROL was not necessary for the function. As the result of the deletion analysis at the N-terminus in the prosequence, the prosequence might work as an intramolecular chaperone. By the cell surface engineering using the gene encoding the C-terminal half of yeast alpha-agglutinin and the insertion of linker peptides, a novel strain displaying lipase on the cell surface was also constructed. Although S. cerevisiae itself is unable to utilize triolein. the transformant strain could grow on triolein as the sole carbon source. The cell surface-engineered yeast displaying ROL might be used as a potent bioctalyst. (C) 2002 Elsevier Science B.V. All rights reserved.