A strain ofFusarium moniliforme, previously used for microbial protein production, excreted lactase (β-D-galactosidase, EC.3.2.1 23) when cultivated either in a whey liquid medium or on a wheat bran solid medium. The enzyme produced in both media had pH and temperature optima of 4–5 and 50–60°C respectively and was particularly suitable for processing acid whey. In the whey culture, maximum lactase yield was observed after 95 h of growth at 30°C and whey lactose concentration of 9%. The addition of ammonium, potassium and sodium ions to the growth medium considerably enhanced lactase production. A maximum enzyme yield corresponding to hydrolysis of 3 nmoles o-nitrophenyl-β-D-galactopyranoside sec−1 ml−1 of growth medium, at pH 5 and 60°C, was obtained. In the wheat bran culture, the maximum enzyme yield was obtained after 140 h of growth at 28–30°C. A marked increase in the enzyme production was observed when nitrate or phosphate was added to the growth medium. Also, the addition of certain agricultural by-products (molasses, whey) enhanced lactase production. The observed maximum yield corresponding to the hydrolysis of 182 nmoles of ONPG sec−1 g−1 of wheat bran, at pH 5 and 60°C, is comparable to that reported for certain microorganisms used commercially for lactase production.