Indole 3-acetic acid (IAA) is the principal hormone which regulates various developmental and physiological processes in plants. IAA production is considered as a key trait for supporting plant growth. Hence, in this study, production of indole-3-acetic acid (IAA) by a basidiomycetous red yeast Rhodosporidium paludigenum DMKU-RP301 (AB920314) was investigated and improved by the optimization of the culture medium and culture conditions using one factor at a time (OFAT) and response surface methodology (RSM). The study considered the effects of incubation time, carbon and nitrogen sources, growth factor, tryptophan, temperature, shaking speed, NaCl and pH, on the production of IAA. The results showed that all the factors studied, except NaCl, affected IAA production by R. paludigenum DMKU-RP301. Maximum IAA production of 1,623.9 mg/l was obtained as a result of the studies using RSM. The optimal medium and growth conditions observed in this study resulted in an increase of IAA production by a factor of up to 5.0 compared to the unoptimized condition, i.e. when yeast extract peptone dextrose (YPD) broth supplemented with 0.1% l-tryptophan was used as the production medium. The production of IAA was then scaled up in a 2-l stirred tank fermenter, and the maximum IAA of 1,627.1 mg/l was obtained. This experiment indicated that the obtained optimal medium and condition (pH and temperature) from shaking flask production can be used for the production of IAA in a larger size production. In addition, the present research is the first to report on the optimization of IAA production by the yeast Rhodosporidium.