Laccase from Myceliophthora thermophila (MtL) was expressed in functional form in Saccharomyces cerevisiae. Directed evolution improved expression eightfold to the highest yet reported for a laccase in yeast (18 mg/liter). Together with a 22-fold increase in k(cat), the total activity was enhanced 170-fold. Specific activities of MtL mutants toward 2,2'-azino-bis(3-ethylbenzthiazoline-6-sulfonic acid) and syringaldazine indicate that substrate specificity was not changed by the introduced mutations. The most effective mutation (10-fold increase in total activity) introduced a Kex2 protease recognition site at the C-terminal processing site of the protein, adjusting the protein sequence to the different protease specificities of the heterologous host. The C terminus is shown to be important for laccase activity, since removing it by a truncation of the gene reduces activity sixfold. Mutations accumulated during nine generations of evolution for higher activity decreased enzyme stability. Screening for improved stability in one generation produced a mutant more stable than the heterologous wild type and retaining the improved activity. The molecular mass of MtL expressed in S. cerevisiae is 30% higher than that of the same enzyme expressed in M. thermophila (110 kDa versus 85 kDa). Hyperglycosylation, corresponding to a 120-monomer glycan on one N-glycosylation site, is responsible for this increase. This S. cerevisiae expression system makes MtL available for functional tailoring by directed evolution.