Sustainable production of ethanol as alternative renewable fuels, there is a need for a yeast strain which can convert the non-food substrate into ethanol economically. Extensive screening program for such yeast for bioethanol production was attempted from the diverge ecosystem. That resulted into isolation of a yeast strain, designated strain ETDLT1, which was capable of ethanol fermentation using lactose as carbon source even at elevated temperatures. Beside this the strain is ethanol tolerant up to 12 %. The lactose fermentation performance of selected ETDLT1 strain was evaluated. It was found to produce 28 g/l of ethanol with yield of 0.36 %. (p/s, g/g). In laboratory fermentation ETDLT1 strain found significant potential for its ability for bioconversion of dairy processing wastes rich in lactose into ethanol in single step fermentation. Therefore, it was further selected for thorough characterization. Results of characteristics confirm the ETDLT1 isolate as the strain of Kluyveromyces marxianus.