Endostatin is a potent angiogenesis inhibitor. In order to isolate sufficient quantities of soluble protein for in vivo studies in mice, we expressed murine endostatin in Pichia pastoris. Analysis of the expressed protein by mass spectrometry indicated that the protein was truncated. N-terminal sequence analysis determined that the N-terminus was intact, suggesting that the C-terminal lysine was missing. In Saccharomyces cerevisiae, Kex1p can cleave lysine and arginine residues from the C-terminus of peptides and proteins. We hypothesized that the KEX1 homologue in P. pastoris is responsible for the loss of the C-terminal lysine of endostatin. To test this hypothesis, we cloned and disrupted the P. pastoris KEX1 gene. Although the overall amino acid identity between the P. pastoris and the S. cerevisae Kex1p is only 36%, the amino acid residues involved in the catalytic activity or close to the active residues are highly conserved. Disruption of the KEX1 reading frame allowed expression of murine and human endostatin with the C-terminal lysine. The KEX1 disruption strain may be a useful tool for the expression of other proteins with a C-terminal basic amino acid. Addition of a lysine to the C-terminus of recombinant proteins may protect the C-terminus from degradation by other carboxypeptidases.