Heterologous proteins secreted by yeast and fungal expression hosts are occasionally degraded at basic amino acids. We cloned Pichia pastoris homologs of the Saccharomyces cerevisiae basic residue-specific endoproteases Kex2 and Yps1 to evaluate their involvement in the degradation of a secreted mammalian gelatin. Disruption of the P. pastoris KEX2 gene prevented proteolysis of the foreign protein at specific monoarginylic sites. The S. cerevisiae alpha-factor preproleader used to direct high-level gelatin secretion was correctly processed at its dibasic site in the absence of the prototypical proprotein convertase Kex2. Disruption of the YPS1 gene had no effect on gelatin degradation or processing of the alpha-factor propeptide. When both the KEX2 and YPS1 genes were disrupted, correct precursor maturation no longer occurred. The different substrate specificities of both proteases and their mutual redundancy for propeptide processing indicate that P. pastoris kex2 and yps1 single-gene disruptants can be used for the alpha-factor leader-directed secretion of heterologous proteins otherwise degraded at basic residues.