Whey powder, a by-product of dairy industry, is an attractive raw material for value-added products. In this study, utilization of whey powder as substrate for low-cost preparation of beta-galactosidase as main product and ethanol as by-product were investigated by a litre-scale integrated strategy, encompassing fermentation, isolation, permeabilization and spray drying. Firstly, through development of low-cost industrial culture and fedbatch strategies by Kluyveromyces lactis, 119.30 U/mL beta-galactosidase activity and 16.96 mg/mL by-product ethanol were achieved. Afterward, an up-dated mathematic model for the recycling permeabilization was established successfully and 30.4 g cells sediment isolated from 5 L fermentation broth were permeabilized completely by distilled ethanol from broth supernatant. Then beta-galactosidase product with 5.15 U/mg from protection of gum acacia by spray drying was obtained. Furthermore, by-product ethanol with 31.08% (v/v) was achieved after permeabilization. Therefore, the integrated strategy using whey powder as substrate is a feasible candidate for industrial-scale implementation.