Brain-derived neurotrophic factor (BDNF) plays an important role in nervous system function and has therapeutic potential. Microbial production of BDNF has resulted in a low-fidelity protein product, often in the form of large, insoluble aggregates incapable of binding to cognate TrkB or p75 receptors. In this study, employing Saccharomyces cerevisiae display and secretion systems, it was found that BDNF was poorly expressed and partially inactive on the yeast surface and that BDNF was secreted at low levels in the form of disulfide-bonded aggregates. Thus, for the purpose of increasing the compatibility of yeast as an expression host for BDNF, directed-evolution approaches were employed to improve BDNF folding and expression levels. Yeast surface display was combined with two rounds of directed evolution employing random mutagenesis and shuffling to identify BDNF mutants that had 5-fold improvements in expression, 4-fold increases in specific TrkB binding activity, and restored p75 binding activity, both as displayed proteins and as secreted proteins. Secreted BDNF mutants were found largely in the form of soluble homodimers that could stimulate TrkB phosphorylation in transfected PC12 cells. Site-directed mutagenesis studies indicated that a particularly important mutational class involved the introduction of cysteines proximal to the native cysteines that participate in the BDNF cysteine knot architecture. Taken together, these findings show that yeast is now a viable alternative for both the production and the engineering of BDNF.