Dynamical quasi-localization of matter fields in extra dimension is an elegant mechanism to generate hierarchical 4-dimensional Yukawa couplings. We point out that a bulk matter field whose zero mode is quasi-localized can give a large Kaluza-Kicin threshold correction to low energy gauge couplings, which is generically of the order of In(Yukawa)/8pi(2), so it can significantly affect gauge coupling unification. We compute such threshold corrections in generic 5-dimensional theories compactified on S-1/Z(2) x Z(2), and apply the result to grand unified theories on orbifold generating small Yukawa couplings through quasi-localization. (C) 2004 Elsevier B.V. All rights reserved.