The alkaline protease genes (cDNAALP2 gene and ALP2 gene) were amplified from complementary DNA (cDNA) and genomic DNA of the marine yeast Aureobasidium pullulans HN2-3, respectively. An open reading frame of 1,248 bp encoding a 415-amino acid protein with a calculated molecular weight of 42.9 kDa was characterized. The ALP2 gene contained two introns, which had 54 and 52 bp, respectively. When the cDNAALP2 gene was cloned into the multiple cloning sites of the surface display vector pINA1317-YlCWP110 and expressed in cells of Yarrowia lipolytica, the cells displaying protease could form a clear zone on the double plate containing milk protein and had protease activity. The cells displaying alkaline protease were also found to be able to produce bioactive peptides from different sources of proteins. The peptides produced from single-cell protein of marine yeast strain G7a had the highest angiotensin-converting enzyme inhibitory activity, while the peptides produced from spirulina protein had the highest antioxidant activity. This is the first report that the yeast cells displaying alkaline protease were used to produce bioactive peptides.