Paenibacillus spp. BD3526, a bacterium exhibiting a protein hydrolysis circle surrounded with an obvious precipitation zone on skim milk agar, was isolated from raw yak (Bos grunniens) milk collected in Tibet, China. Phylogenetic analysis based on 16S rRNA and whole genome sequence comparison indicated the isolate belong to the genus Paenibacillus. The strain BD3526 demonstrated strong ability to produce protease with milk clotting activity (MCA) in wheat bran broth. The protease with MCA was predominantly accumulated during the late-exponential phase of growth. The proteolytic activity (PA) of the BD3526 protease was 1.33-fold higher than that of the commercial R. miehei coagulant. A maximum MCA (6470 ± 281 SU mL⁻¹) of the strain BD3526 was reached under optimal cultivation conditions. The protease with MCA was precipitated from the cultivated supernatant of wheat bran broth with ammonium sulfate and purified by anion-exchange chromatography. The molecular weight of the protease with MCA was determined as 35 kDa by sodium dodecyl sulfate-polyacrylamide gels electrophoresis (SDS-PAGE) and gelatin zymography. The cleavage site of the BD3526 protease with MCA in κ-casein was located at the Met₁₀₆–Ala₁₀₇ bond, as determined by mass spectrometry analysis.