ABSTRACT Unspecific peroxygenase (UPO) represents a new type of heme-thiolate enzyme with self-sufficient mono(per)oxygenase activity and many potential applications in organic synthesis. With a view to taking advantage of these properties, we subjected the Agrocybe aegerita UPO1-encoding gene to directed evolution in Saccharomyces cerevisiae . To promote functional expression, several different signal peptides were fused to the mature protein, and the resulting products were tested. Over 9,000 clones were screened using an ad hoc dual-colorimetric assay that assessed both peroxidative and oxygen transfer activities. After 5 generations of directed evolution combined with hybrid approaches, 9 mutations were introduced that resulted in a 3,250-fold total activity improvement with no alteration in protein stability. A breakdown between secretion and catalytic activity was performed by replacing the native signal peptide of the original parental type with that of the evolved mutant; the evolved leader increased functional expression 27-fold, whereas an 18-fold improvement in the k _cat / K _m value for oxygen transfer activity was obtained. The evolved UPO1 was active and highly stable in the presence of organic cosolvents. Mutations in the hydrophobic core of the signal peptide contributed to enhance functional expression up to 8 mg/liter, while catalytic efficiencies for peroxidative and oxygen transfer reactions were increased by several mutations in the vicinity of the heme access channel. Overall, the directed-evolution platform described is a valuable point of departure for the development of customized UPOs with improved features and for the study of structure-function relationships.