Although the acetone-butanol-ethanol fermentation of Clostridium acetobutylicum is currently uneconomic, the ability of the bacterium to metabolize a wide range of carbohydrates offers the potential for revival based on the use of cheap, low-grade substrates. We have investigated the uptake and metabolism of lactose, the major sugar in industrial whey waste, by C. acetobutylicum ATCC 824. Lactose is taken up via a phosphoenol-pyruvate- dependent phosphotransferase system (PTS) comprising both soluble and membrane-associated components, and the resulting phosphorylated derivative is hydrolyzed by a phospho-ß-galactosidase. These activities are induced during growth on lactose but are absent in glucose-grown cells. Analysis of the C. acetobutylicum genome sequence identified a gene system, lacRFEG, encoding a transcriptional regulator of the DeoR family, IIA and IICB components of a lactose PTS, and phospho-ß-galactosidase. During growth in medium containing both glucose and lactose, C. acetobutylicum exhibited a classical diauxic growth, and the lac operon was not expressed until glucose was exhausted from the medium. The presence upstream of lacR of a potential catabolite responsive element (cre) encompassing the transcriptional start site is indicative of the mechanism of carbon catabolite repression characteristic of low-GC gram-positive bacteria. A pathway for the uptake and metabolism of lactose by this industrially important organism is proposed. Copyright © 2007, American Society for Microbiology. All Rights Reserved.