Xanthophyllomyces dendrorhous is a basidiomycete yeast known as a natural producer of astaxanthin, a carotenoid of commercial interest because of its antioxidant properties. Recent studies indicated that X. dendrorhous has a functional SREBP pathway involved in the regulation of isoprenoid compound biosynthesis, which includes ergosterol and carotenoids. SREBP is a major regulator of sterol metabolism and homeostasis in mammals; characterization in fungi also provides information about its role in the hypoxia adaptation response and virulence. SREBP protease processing is required to activate SREBP pathway functions in fungi. Here, we identified and described the STP1 gene, which encodes a metallopeptidase of the M50 family involved in the proteolytic activation of the transcription factor Sre1 of the SREBP pathway, in X. dendrorhous. We assessed STP1 function in Delta stp1 strains derived from the wild-type and a mutant of ergosterol biosynthesis that overproduces carotenoids and sterols. Bioinformatic analysis of the deduced protein predicted the presence of characteristic features identified in homologs from mammals and fungi. The Delta stp1 mutation decreased yeast growth in the presence of azole drugs and reduced transcript levels of Sre1-dependent genes. This mutation also negatively affected the carotenoid- and sterol-overproducing phenotype. Western blot analysis demonstrated that Sre1 was activated in the yeast ergosterol biosynthesis mutant and that the Delta stp1 mutation introduced in this strain prevented Sre1 proteolytic activation. Overall, our results demonstrate that STP1 encodes a metallopeptidase involved in proteolytic activation of Sre1 in X. dendrorhous, contributing to our understanding of fungal SREBP pathways.