We have successfully secreted the amino-terminal functional domain of mouse sonic hedgehog protein (SHH) into culture fluid using a yeast Pichia pastoris expression system. A cDNA fragment encoding the amino-terminal domain of mouse SHH was inserted downstream of the Saccharomyces cerevisiae alpha-mating factor secretion signal. The DNA fragment was introduced into the host genome by the spheroplast transformation method. Transformants were selected based on their resistance to G418. His(+) transformants which showed resistance to over 8 mg G418/ml were selected and analyzed for determination of the plasmid copy number. One His(+) clone which has eight copies of the expression cassette per genome was cultured in minimal medium deficient for histidine, and further cultured in buffered medium supplemented with methanol which activates the AOX1 promoter. SDS-PAGE analysis indicated efficient expression and secretion of mouse SHH into culture fluid. The yield of secreted SHH was estimated to be 50 mu g/ml. Purified protein was assayed for biological activity and found to activate the transcription of the Patched genes (Ptc-1 and Ptc-2) encoding receptors for SHH.