Candida albicans possesses at least seven differentially expressed genes that encode virulence-related secretory aspartyl proteinases (Saps). Sap DNA sequences predict post-translational processing at lysine-arginine residues in the preproteins, reminiscent of the maturation of Saccharomyces cerevisiae alpha-factor, where a prepropolypeptide is converted into a biologically active pheromone by Kex2, a subtilisin-like proprotein convertase. To investigate involvement of a C. albicans KEX2 homologue in Sap activation, a genetic selection was performed based on KEX2 function. A kex2 strain of S. cerevisiae was transformed with a C. albicans genomic DNA library and screened for the production of active alpha-factor. Positive clones were assayed for killer toxin activity, another Kex2-dependent phenotype. Plasmids that rescued both defects contained a sequence encoding a protein homologous to S. cerevisiae Kex2. Both alleles of the C. albicans KEX2 were inactivated by successive mutations. Null mutants continued to secrete active Sap2; however, the enzyme was abnormally processed and secreted at reduced levels. Unexpectedly, null mutants were incapable of forming hyphae, instead differentiating into aberrantly shaped cells. The ability to normally process Sap2 and form hyphae was restored upon transformation of null mutants with a KEX2-containing plasmid.