The ste1 gene encoding a steryl esterase was isolated from the thermophilic fungus Melanocarpus albomyces. The gene has one intron, and it encodes a protein consisting of 576 amino acids. The deduced amino acid sequence of the steryl esterase was shown to be related to lipases and other esterases such as carboxylesterases. Formation of mature protein requires post-translational removal of a putative 18-amino-acid signal sequence and a 13-residue propeptide at the N-terminus. The intronless version of the Melanocarpus albomyces ste1 gene was expressed in Pichia pastoris under the inducible AOX1 promoter. The production level was low, and a large proportion of the total activity yield was found to be present intracellularly. However, the fact that steryl esterase activity was produced by P. pastoris cells carrying the expression cassette confirmed that the correct gene had been cloned. The stet gene was subsequently expressed in T reesei under the inducible cbh1 promoter, and a clearly higher production level was obtained. About 60% of the total activity was bound to the fungal mycelium or to solid components of the culture medium, or existed as aggregates. Triton X-100 was successfully used to recover this activity. The heterologous production system in T. reesei provides a means of producing M. albomyces steryl esterase STE1 reliably in large scale for future studies. (c) 2006 Wiley Periodicals, Inc.