Comparative studies on some preparations of Kluyveromyces marxianus beta-galactosidase show that enzyme localized in permeabilized cells and in glutaraldehyde treated permeabilized cells was more thermostable at 45 degrees C, than cell-free enzyme, In contrast, the temperature optimum (50-52 degrees C) was not affected significantly by the intracellular localization Permeabilized cells immobilized by entrapment into hardened calcium alginate gel or treated with glutaraldehyde were used for repeated lactose hydrolysis at 45 degrees C and showed good operational stability.