Xylanases have useful applications in a wide range of industries. In this regard, Pichia pastoris has become one of the most attractive host platforms for large-scale production of xylanases. However, genomic engineering is still required for overexpression and efficient secretion. In this paper, we applied droplet-based method to screen directed evolved extracellular xylanase producing P. pastoris strain. Xylanase-producing P. pastoris cells were encapsulated in gel microdroplets with a fluorogenic reporter substrate. Improved production of xylanase increases fluorescence intensity of gel microdroplets, enabled accurate selection of evolved clones by droplet sorting. The screening strategy was validated by identifying yeast with improved xylanase production from a mixed sample with a positive selection accuracy of up to 98%. After three rounds of mutagenesis and selection, approximately 108 variants were screened, and a P. pastoris clone with more than 1.3-fold increase in xylanase activity was identified, representing cellular functions improvement of the production host. The throughput of this approach was at least 103-fold higher than that of the robot-assisted microtiter plate reader, and reagent consumption was reduced by ∼106-fold. Furthermore, the greatly shortened incubation time prior screening significantly accelerated the process of directed evolution.