Yeast has been analysed for its potential to secrete an ovine member of the type-I interferon (IFN) family, trophoblastin (oTP-1). The processing potential of the yeast KEX2 gene product (KEX2p) was evaluated using gene oTP-1 fused to the pre-pro sequence encoding the pre-pro peptide of the yeast alpha-factor precursor. High-level accumulation of nonprocessed (unmatured) recombinant oTP-1 (re-oTP-1) was observed in the medium. In order to short-circuit the limiting activity of KEX2p and to obtain a fully matured re-oTP-1, secretion was directed using a pre::oTP-1 fusion, relying only on signal peptidase-dependent processing. However, secretion of oTP-1 was impaired. High-level secretion was restored when the gene product contained a peptide spacer between oTP-1 and the signal peptidase cleavage site. The oTP-1 variant was shown to have an extended N terminus. An N-extended form was examined further and shown to have the correct size. Surprisingly, the variant retained its in vitro and in vivo biological activities. This system is likely to represent a general method for high-level secretion of type-I IFNs.