The isolation of a temperature sensitive pts I mutant which fails to utilize lactose provides strong evidence that Klebsiella strain CT-1 utilizes lactose via a phosphoenolpyruvate dependent lactose-phosphotransferase system (PTS-lac). We designate this lactose utilization system elu for evolved lactose utilization. Analysis of a series of Lac− mutants identifies two genes, eluA and eluB, whose function is required for lactose utilization by this pathway. The functions specified by these genes are not known, but neither locus specifies the hydrolytic enzyme phospho-β-galactosidase. A mutant of CT-1, strain RPD-2, exhibits a half-maximal growth rate at a lactose concentration 40 fold lower than that of strain CT-1; and it has a Km for lactose uptake that is 40 fold lower than that of strain CT-1. That mutation defines the locus eluC, which is assumed to specify the enzyme Il(lac) of the PTS-lactose system. From the observations that (i) cellobiose induces the phospho-β-galactosidase enzyme, (ii) pregrowth in cellobiose dramatically reduces the growth lag when cells are shifted into lactose minimal medium, (iii) eluB mutants exhibit a growth lag when shifted into cellobiose minimal medium, and (iv) lactose induces a phospho-β-glucosidase enzyme; we speculate that the phospho-β-glucosidase enzyme is the same enzyme as the phospho-β-glucosidase that normally functions in cellobiose metabolism. We conclude that the original mutation that allowed CT-1 to utilize lactose was a regulatory mutation that permitted inducible expression of the eluC gene.