The MKC7 gene was isolated as a multicopy suppressor of the cold-sensitive growth phenotype of a yeast kex2 mutant, which lacks the protease that cleaves pro-alpha-factor and other secretory proproteins at pairs of basic residues in a late Golgi compartment in yeast. MKC7 encodes an aspartyl protease most closely related to product of the YAP3 gene, a previously isolated multicopy suppressor of the pro-alpha-factor processing defect of a kex2 null. Multicopy MKC7 suppressed the alpha-specific mating defect of a kex2 null as well as multicopy YAP3 did, but multicopy YAP3 was a relatively weak suppressor of kex2 cold sensitivity. Overexpression of MKC7 resulted in production of a membrane-associated proteolytic activity that cleaved an internally quenched fluorogenic peptide substrate on the carboxyl side of a Lys-Arg site. Treatment with phosphatidylinositol-specific phospholipase C shifted Mkc7 activity from the detergent to the aqueous phase in a Triton X-114 phase separation, indicating that membrane attachment of Mkc7 is mediated by a glycosyl-phosphatidylinositol anchor. Although disruption of MKC7 or YAP3 alone resulted in no observable phenotype, mkc7 yap3 double disruptants exhibited impaired growth at 37 degrees C. Disruption of MKC7 and YAP3 in a kex2 null mutant resulted in profound temperature sensitivity and more generalized cold sensitivity. The synergism of mkc7, yap3, and kex2 null mutations argues that Mkc7 and Yap3 are authentic processing enzymes whose functions overlap those of Kex2 in vivo.