A gene coding for the $eta$-galactosidase (lactase) of Kluyveromyces tragilis UCD 55-55 was isolated by complementation in Escherichia coli YMC9. From the plasmid library made from Sau3A-digested chromosomal DNA, one positive clone was selected. The cloned gene for $eta$-galactosidase was on 7.3 kilobase pair DNA fragment, and a slightly low level of $eta$-galactosidase enzyme activity was detecied in E. coli. It was also confirmed that the cloned gene comes from K. tragilis by DNA-DNA hybridization and immunochemical blotting experiments. In order to construct a new yeast strain having the metabolic ability for lactose, the cloned gene for K. tragilis $eta$-galactosidase was inserted in yeast vector YEp24 and YRp17, and transformed into Saccharomyces cerevisiae YNN27 and Ml-2B. The yeast transformants showed the nearly the same $eta$-galactosidase productivity as level of K. tragilis when uninduced, but these could not utilize lactose as a sole carbon source, presumably due to the lack of lactose transport system. Nevertheless, a slightly higher ethanol productivity was achieved by these transformants than S. cerevisiae or K. tragilis, in the medium containing glucose and lactose.