The productivity of ε-poly-L: -lysine (ε-PL) in currently reported wild-type strains is low. Here we improved glucose tolerance of a Streptomyces graminearus strain LS-B1 by genome shuffling while simultaneously enhancing the ε-PL productivity. The starting population was generated by ultraviolet irradiation and nitrosoguanidine mutagenesis and then subjected for recursive protoplast fusion. The positive colonies from library, created by fusing the inactivated protoplasts were screened on agar plates containing different concentrations of glucose. Characterization of all recombinants and wild-type strain in shake-flask fermentation indicated the compatibility of two phenotypes of glucose tolerance and ε-PL yield enhancement. The best performing recombinant, F3-4, was isolated after three rounds of genome shuffling, whose ε-PL production was about 88% higher than that of the parent strain. In batch fermentation test, the ε-PL concentration was obtained as 2.4 g/L by F3-4 compared with 1.6 g/L of wild type. Fed-batch fermentation by F3-4 was carried out and the ε-PL production accumulated to 13.5 g/L when initial glucose concentration was improved from 50 to 85 g/L. Enzyme activities of hexokinase, pyruvate kinase, and citrate synthase revealed that the glycolytic pathway and tricarboxylic acid circle way in F3-4 were more active than those in wild type, which was a possible reason for enhanced ε-PL production.