Lactose is the only soluble and economically feasible carbon source for the production of cellulases or heterologous proteins regulated by cellulase expression signals by Hypocrea jecorina (Trichoderma reesei). We investigated the role of the major -galactosidase of H. jecorina in lactose metabolism and cellulase induction. A genomic copy of the bga1 gene was cloned, and this copy encodes a 1,023-amino-acid protein with a 20-amino-acid signal sequence. This protein has a molecular mass of 109.3 kDa, belongs to glycosyl hydrolase family 35, and is the major extracellular -galactosidase during growth on lactose. Its transcript was abundant during growth on L-arabinose and L-arabinitol but was much less common when the organism was grown on lactose, D-galactose, galactitol, D-xylose, and xylitol. ⌬bga1 strains grow more slowly and accumulate less biomass on lactose, but the cellobiohydrolase I and II gene expression and the final cellulase yields were comparable to those of the parental strain. Overexpression of bga1 under the control of the pyruvate kinase promoter reduced the lag phase, increased growth on lactose, and limited transcription of cellobiohydrolases. We detected an additional extracellular -galactosidase activity that was not encoded by bga1 but no intracellular -galactosidase activity. In conclusion, cellulase production on lactose occurs when -galactosidase activity levels are low but decreases as the -galactosidase activities increase. The data indicate that bga1-encoded -galactosidase activity is a critical factor for cellulase production on lactose.The ascomycete Hypocrea jecorina (anamorph, Trichoderma reesei) is used industrially to produce cellulolytic and hemicellulolytic enzymes, and its strong cellulase promoters are of interest for heterologous protein production by this fungus. Cellulase and hemicellulase formation can be induced by several mono-and disaccharides, including sophorose, xylobiose, lactose, D-xylose, and L-sorbose, most of which are too expensive for industrial fermentations. Thus, the range of technically applicable carbon sources is limited. For cellulase and heterologous protein production with cellulase promoters, lactose (1,4-O--D-galactopyranosyl-D-glucose) is virtually the only carbon source that can be used. However, the mechanism by which lactose triggers cellulase formation is not understood. Lactose metabolism is slow, and the cellulase yields on lactose are lower than those on cellulose (27, 28).A key enzyme in the induction of cellulase is galactokinase, since a galactokinase-negative mutant cannot induce cellulases during growth on lactose (30). Lactose can enter the cell after it is hydrolyzed extracellularly to D-glucose and D-galactose by a -galactosidase (lactase, -D-galactoside galactohydrolase; E.C 3.2.1.23), and the monosaccharides are then taken up by the respective permeases. Extracellular -galactosidases are known from several fungi, including Aspergillus niger, Aspergillus oryzae, and Penicillium canescens (5,21,26,29). Alternatively, the...