Disposal of lactose in whey and whey permeates is one of the most significant problems with regard to economics and environmental impact faced by the dairy industries. The enzymatic hydrolysis of whey lactose to glucose and galactose by beta-galactosidase constitutes the basis of the most biotechnological processes currently developed to exploit the sugar content of whey. Keeping this in view, lactose hydrolysis in whey was performed using CTAB permeabilized Kluyveromyces marxianus cells. Permeabilization of K. marxianus cells in relation to beta-galactosidase activity was carried out using cetyltrimethyl ammonium bromide (CTAB) to avoid the problem of enzyme extraction. Different process parameters (biomass load, pH, temperature, and incubation time) were optimized to enhance the lactose hydrolysis in whey. Maximum hydrolysis (90.5%) of whey lactose was observed with 200 mg DW yeast biomass after 90 min of incubation period at optimum pH of 6.5 and temperature of 40 degrees C.