Heterologous expression of eukaryotic expression in prokaryotic systems like Escherichia coli is often limited by the production of unstable polypeptides susceptible to proteolysis. However, the rationale for such intracellular proteolysis and the associated molecular mechanisms are incompletely understood. The limited expression of the yeast Pseudozyma antarctica lipase B (PalB) protein in the periplasm of E. coli was improved by a stable mutant resistant to proteolysis derived by error prone mutagenesis. Two proteolytically sensitive amino acid residues, i.e. Leu149 and Val223, were identified to critically affect PalB's susceptibility to proteolysis in E. coli. Several stable and unstable mutant variants of PalB were obtained with site directed replacement at the ‘hot spots' Leu149 and Val223 by similar non polar amino acid residues. The stability and cultivation performance was drastically enhanced by the mutant derivative of PalB that can evade intracellular proteolysis, though the improved expression was limited by issues with protein misfolding. Improved expression performance with 3 folds enhanced specific PalB activities and higher cell densities were achieved by cultivation in bioreactor. The coexpression of the periplasmic chaperone DsbA significantly reduced the inclusion body formation and enhanced the PalB activity. Here we experimentally demonstrated that the proteolytic specificity of PalB was determined by its protein sequence and its molecular manipulation served as an excellent strategy for recombinant PalB production in E. coli. Keywords: Pseudozyma antarctica lipase B; Escherichia coli; protein secretion; periplasm; proteolysis; mutagenesis; protein stability; chaperone.