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Abstract Background Dye-decolorizing peroxidases (DyPs) are haem-containing peroxidases that show great promises in industrial biocatalysis and lignocellulosic degradation. Through the use of Escherichia coli osmotically-inducible protein Y (OsmY) as a bacterial extracellular protein secretion system (BENNY), we successfully developed a streamlined directed evolution workflow to accelerate the protein engineering of DyP4 from Pleurotus ostreatus strain PC15. Result After 3 rounds of random mutagenesis with error-prone polymerase chain reaction (epPCR) and 1 round of saturation mutagenesis, we obtained 4D4 variant (I56V, K109R, N227S and N312S) that displays multiple desirable phenotypes, including higher protein yield and secretion, higher specific activity (2.7-fold improvement in k cat/K m) and higher H2O2 tolerance (sevenfold improvement based on IC50). Conclusion To our best knowledge, this is the first report of applying OsmY to simplify the directed evolution workflow and to direct the extracellular secretion of a haem protein such as DyP4.