Dicarboxylic acids (DCAs) are derivatives of fatty acids and can be used as precursors for non-petrol-based polyesters and coatings, greases, adhesives, pharmaceuticals etc. Short chain diacids can besynthesized in high yields whereas long chain diacids production is tough and expensive because of its purification from their byproducts are in high demand.To obtain sustainable industry yeasts are considered as best example for producing diacids as they naturally produce small amount of diacids. Alkane assimilating pathway in yeast can produce DCA by using ω-oxidation pathway but the problem is that the produced diacids can be catabolized in ß oxidation pathway. In the previous studies carried out at VTT the yeasts Yarrowia lipolytica and Pichia guilliermondii which were identified as promising hosts for long chain dicarboxylic acid production were modified by deleting MFE2gene of β-oxidation pathway. Prior these strains can be modified further for example by expressing the omega-oxidation cytochrome P450 hydroxylase complex the marker cassettes have to be removed. To this purposes Cre-recombinase/loxP recombination system was generated in this thesis. A Cre-recombinase plasmid having Cre recombinase, Hph marker gene and autonomously replicating sequence (ARS) was constructed for Yarrowia lipolytica. ARS sequence cloned in this thesis work was compared with published sequences and it was similar toYarrowia lipolytica ARS18 with 99.69% similarity.This shows the ARS sequence obtained in this work is equal to ARS18. Cre-recombinase plasmid was tested in MFE2 deleted Yarrowia lipolytica strain and it was able to loop out nourseothricin marker from genomic DNA. Additionally, Cre-recombinase plasmid could be looped out fromYarrowia lipolytica strain. Overexpression of the first enzymes of ω-oxidation-(Nicotiana Tabacum P450 hydrolase and Arabidopsis thaliana P450 reductase) in the Yarrowia lipolytica MFE2 deleted strain was successful. Cultivations with 0.3 % pelagronic acid (C9 fatty acid) resulted in 78,29 mg/l of C9 diacid production. Whereas with 1% oleic acid (C18:1 fatty acid) only substrate consumption was observed without diacid production. With Pichia guilliermondiia new method called Gibson assembly was used to construct the cre-recombinase plasmid. Unfortunately, only Hph marker and ARS sequence was cloned into plasmid.ARS sequence cloned in this work was compared to published sequence by using Clustal-w tool: 99.76 % similarity to the existing P. guilliermondii ARS sequence could be detected. Work can continue further by cloning cre-recombinase into existing plasmid and testing the plasmid in P. guilliermondii MFE2 deletion strains.