A novel integrated process was developed successfully for co-production of beta-galactosidase and ethanol using lactose as substrate, containing fermentation (Kluyveromyces lactis), isolation, permeabilization (a new recycling process) and spray drying. Firstly, a new fed-batch strategy optimized co-produced beta-galactosidase at 105.91 U/mL and ethanol at 32.16 mg/mL, 4.40-fold and 10.82-fold increase over the results from initial conditions, respectively. Then a new mathematic model for the recycling permeabilization was established successfully. As expected, the total cells sediment from isolation of the fedbatch culture was permeabilized completely by distilled ethanol from broth supernatant. More amazedly, the specific activity of beta-galactosidase product by spray drying the permeabilized cells reached 2.61 U/mg, meeting the demand of commercial products. Furthermore, the ethanol product at 33.8% (v/v) was obtained from the novel integrated process, which could be applied for various applications. To conclude, the novel integrated process might be a feasible strategy to scale up for industrialization. (C) 2017 Elsevier Ltd. All rights reserved.