In order to isolate beta-galactosidase overproducers of the psychrotolerant yeast Guehomyces pullulans 17-1, its cells were mutated by using nitrosoguanidine (NTG). One mutant (NTG-133) with enhanced beta-galactosidase production was obtained. The mutant grown in the production medium with 30.0 g/l lactose and 2.0 g/l glucose could produce more beta-galactosidase than the same mutant grown in the production medium with only 30.0 g/l lactose while beta-galactosidase production by its wild type was sensitive to the presence of glucose in the medium. It was found that 40.0 g/l of the whey powder was the most suitable for beta-galactosidase production by the mutant. After optimization of the medium and cultivation conditions, the mutant could produce 29.2 U/ml of total beta-galactosidase activity within 132 h at the flask level while the mutant could produce 48.1 U/ml of total beta-galactosidase activity within 144 h in 2-l fermentor. Over 77.1% of lactose in the whey powder (5.0% w/v) was hydrolyzed in the presence of the beta-galactosidase activity of 280 U/g of lactose within 9 h while over 77.0% of lactose in the whey was hydrolyzed in the presence of beta-galactosidase activity of 280 U/g of lactose within 6 h. This was the first time to show that the beta-galactosidase produced by the psychrotolerant yeast could be used for hydrolysis of lactose in the whey powder and whey.