Lactose is the only soluble carbon source which can be used economically for the production of cellulases or heterologous proteins under cellulase expression signals by Hypocrea jecorina (=Trichoderma reesei). Towards an understanding of lactose metabolism and its role in cellulase formation, we have cloned and characterized the gal1 (galactokinase) gene of H. jecorina, which catalyses the first step in d-galactose catabolism. It exhibits a calculated Mr of 57 kDa, and shows moderate identity (about 40%) to its putative homologues of Saccharomyces cerevisiae and Kluyveromyces lactis. Gal1 is a member of the GHMP family, shows conservation of a Gly/Ser rich region involved in ATP binding and of amino acids (Arg 51, Glu 57, Asp 60, Asp 214, Tyr 270) responsible for galactose binding. A single transcript was formed constitutively during the rapid growth phase on all carbon sources investigated and accumulated to about twice this level during growth on d-galactose, l-arabinose and their corresponding polyols. Deletion of gal1 reduces growth on d-galactose but does only slightly affect growth on lactose. This is the result of the operation of a second pathway for d-galactose catabolism, which involves galactitol as an intermediate, and whose transient concentration is strongly enhanced in the delta-gal1 strain. In this pathway, galactitol is catabolised by the lad1-encoded l-arabinitol-4-dehydrogenase, because a gal1/lad1 double delta-mutant failed to grow on d-galactose. In the delta-gal1 strain, induction of the Leloir pathway gene gal7 (encoding galactose-1-phosphate uridylyltransferase) by d-galactose, but not by l-arabinose, is impaired. Induction of cellulase gene expression by lactose is also impaired in a gal1 deleted strain, whereas their induction by sophorose (the putative cellulose-derived inducer) was shown to be normal, thus demonstrating that galactokinase is a key enzyme for cellulase induction during growth on lactose, and that induction by lactose and sophorose involves different mechanisms.