The effect of induction of protein production was studied in bioreactor cultures of T. reesei strain Rut-C30 and its transformant expressing endoglucanase I core domain (EGI, Cel7B) fused with a hydrophobic peptide tag. The tag was previously designed for efficient purification of the fusion protein in aqueous two-phase separation. The fungi were first grown on glucose-containing minimal medium after which rich medium with lactose as a carbon source was added to induce cellulase production. Production of extracellular protein and cellulase activity and the transcript levels of the major cellulase genes were analyzed during the cultivations. Induction of the cellulase genes followed a similar temporal pattern in both strains, The first phase of induction took place after addition of lactose as soon as glucose was depleted, and the second phase after lactose was consumed. Western analysis showed that a decreased amount of fusion protein was produced in the culture medium compared with the endogenous EGI, although the strain harbors several copies of the recombinant gene under the strong cbh1 promoter. The fusion protein appeared to accumulate within the cells, indicating impaired secretion of the protein. The mRNA levels of the UPR (unfolded protein response) target genes, bip1 and pdi1, and the level of the active form of hac1 transcript encoding the UPR transcription factor increased concurrently with induction of the cellulase genes in both strains, indicating increased requirement of the folding machinery under these conditions. However, only a minor increase in bip1 and pdi1 transcript level was observed in the transformant compared with the parental strain. (C) 2004 Wiley Periodicals, Inc.