We report here a genetic assay suitable for detecting site-specific proteolysis in secretory pathways. The yeast enzyme invertase is linked to the truncated lumenal region of the yeast Golgi membrane protein STE13 via a protease substrate domain in a Saccharomyces cerevisiae strain lacking invertase. When the substrate is cleaved by a specific protease, the invertase moiety is released into the periplasmic space where it degrades sucrose to glucose and fructose. Therefore, site-specific proteolysis can be detected by monitoring the growth of yeast cells on selective media containing sucrose as the sole carbon source. We confirmed the validity of this assay with yeast Kex2 and human TMPRSS2 proteases. Our data suggest that this in vivo assay is an efficient method for the determination of substrate specificity and mutational analysis of secreted or membrane proteases.