The genetics of lactose utilization within the slow-lactose-fermenting Lactococcus lactis strain NCDO2054 was studied with respect to the organization, expression, and evolution of the lac genes. Initially the beta-galactosidase gene (lacZ) was cloned by complementation of an Escherichia coli mutant on a 7-kb HpaI fragment. Nucleotide sequence analysis of the complete fragment revealed part of a gal-lac operon, and the genes were characterized by inactivation and complementation analyses and in vitro enzyme activity measurements. The gene order is galK-galT-lacA-lacZ-galE; the gal genes encode enzymes of the Leloir pathway for galactose metabolism, and lacA encodes a galactoside acetyltransferase. The galT and galE genes of L. lactis LM0230 (a lactose plasmid-cured derivative of the fast-lactose-fermenting L. lactis C2) were highly similar at the nucleotide sequence level to their counterparts in strain NCDO2054 and, furthermore, had the same gene order except for the presence of the intervening lacA-lacZ strain NCDO2054. Analysis of mRNA for the gal and lac genes revealed an unusual transcriptional organization for the operon, with a surprisingly large number of transcriptional units. The regulation of the lac genes was further investigated by using fusions consisting of putative promoter fragments and the promoterless beta-glucuronidase gene (gusA) from E. coli, which identified three lactose-inducible intergenic promoters in the gal-lac operon. The greater similarity of the lacA and lacZ genes to homologs in gram-negative organisms than to those of gram-positive bacteria, in contrast to the homologies of the gal genes, suggests that the genes within the gal operon of L. lactis NCDO2054 have been recently acquired. Thus, the lacA-lacZ genes appear to have engaged the promoters of the gal operon in order to direct and control their expression.