A gene fusion consisting of 960 base pairs of 5'-flanking region of the yeast MF alpha 1 gene, 257 base pairs coding for alpha-factor prepro sequence, and a modified human IFN-alpha 1 gene was constructed. MAT alpha cells containing the chimeric gene synthesized and secreted active IFN-alpha 1 into the growth medium. The secreted interferon molecules contained the last 4 amino acids of alpha-factor prepro sequence and the amino acids encoded by the DNA modifications introduced at the beginning of IFN-alpha 1 gene. DNA sequences coding for these amino acids were removed by oligonucleotide-directed in vitro mutagenesis. Yeast cells transformed with expression plasmids containing the altered junction synthesized and secreted human IFN-alpha 1 with the natural NH2-terminus.