A yeast vacuolar protease, carboxypeptidase Y (CPY), is known to be involved in the C-terminal processing of peptides and proteins; however, its real function remains unclear. The CPY biosynthetic pathway has been used as a model system for protein sorting in eukaryotes. CPY is synthesized as a prepro-form that travels through the ER and Golgi to its final destination in vacuoles. In the course of studies on the transport mechanism of CPY, various post-translational events have been identified, e. g. carbohydrate modification and cleavage of the pre-segments. In addition, sorting signals and various sorting vehicles, similar to those found in higher eukaryotic cells, have been found. The catalytic triad in the active site of CPY makes this enzyme a serine protease. A unique feature distinguishing CPY from other serine proteases is its wide pH optimum, in particular its high activity at acidic pH. Several structural properties which might contribute to this unique feature exist such as a conserved free cysteine residue in the S₁ substrate binding pocket, a recognition site for a C-terminal carboxyl group, and a disulfide zipper motif. The structural bases in CPY functions are discussed in this article.