A new yeast strain with promising probiotic traits was isolated from the Red Sea water samples. The isolate (YMHS) was subjected to genetic characterization and identified as Cryptococcus sp. Nucleotide sequence analysis of the rRNA gene internal transcribed spacer regions showed 95% sequence similarity between the isolate and Cryptococcus albidus. Cryptococcus sp. YMHS exhibited desirable characteristics of probiotic microorganisms; it has tolerance to low pH in simulated gastric juice, resistance to bile salts, hydrophobic characteristics, broad antimicrobial activity, and in vitro ability to degrade cholesterol. The isolate grew well in a semi-defined medium composed of yeast extract, glucose, KH2PO4, (NH4)2SO4, and MgSO4, yielding cell mass of 2.32 and 5.82 g/l in shake flask and in bioreactor cultures, respectively. Fed-batch cultivation, with controlled pH, increased the biomass gradually in culture, reaching 28.5 g/l after 32 h cultivation. Beside the feasible use as a probiotic, the new strain also could be beneficial in the development of functional foods or novel food preservatives. To our knowledge, this is the first report of yeast with probiotic properties isolated from the Red Sea.