The bacterial lacZ gene was introduced into two sibling strains of Saccharomyces cerevisiae, one a wild-type strain with normal proteinase activity and the other a pep4-3 mutant strain. The pep4-3 mutation resulted in 90% reduced activity of the four major vacuolar proteinases. By comparing the activity of the lacZ gene product (beta-galactosidase) in both strains the degradative effect of the major vacuolar proteinases on a heterologous protein was estimated. The mutant strain with reduced proteinase activity had higher beta-galactosidase activity under all the test conditions. In the most productive case the pep4-3 mutant had 55% higher beta-galactosidase activity than the wild-type. Batch cultures of the two strains were evaluated for growth characteristics. The strain with reduced proteinase activity grew to higher optical densities than the wild-type. Upon further examination it was found that not only were the optical densities of pep4-3 cultures greater but the cell numbers were much greater than expected due to the smaller size of pep4-3 cells. It is concluded that the strain lacking vacuolar proteinases maintained increased levels of beta-galactosidase and is physiologically as healthy as the wild-type.