Ten strains of Propionibacterium shermanii were tested for beta-galactosidase (beta-gal) activity. Of these ten strains, five yielded enhanced enzyme activity when cell suspensions were treated with toluene-acetone; on solvent treatment, the remaining five lost a considerable portion of the activity found in whole-cell suspensions. By using a strain yielding decreased activity upon solvent treatment, explanations for the loss in activity were sought through assays for possible alternative beta-galactoside utilization mechanisms. When this strain was assayed for beta-D-phosphogalactoside galactohydrolase by using orthonitrophenyl-beta-D-galactopyranoside-6-P04 as a substrate, the activity was wither lower or indiffernt as compared with beta-gal activity determined simultaneously. Cell suspensions of P. shermanii 7 and 22 (strains chosen for further work) grown separately on the individual substrates (lactose, glucose, galactose, and sodium lactate) did not show significant differences in beta-gal activity. Optimal temperature for beta-gal activity in untreated and toluene-acetone-treated cell suspensions of strain 7 was 52 C. With strain 22, of the temperatures tested, maximal activity in untreated cell suspensions was noted at 58 C and with solvent-treated cells at 32 C. In the cell-free extract (CFE) system, both strains exhibited maximal activity at 52 C. Optimal pH for untreated and solvent-treated cell suspensions of both strains was around 7.5. In the P. shermanii 22 CFE system, maximal activity occurred at pH 7.0; pH had very little effect on enzyme activity in P. shermanii 7 CFE. Sodium or potassium phosphate buffers in the assay system yielded the best activity. In the CFE system of these two strains, Mn2+ was definitely stimulatory, but in untreated and solvent-treated cell systems of these strains presence or absence of Mn2+ in the assay system had variable effects on enzyme activity. Maximal beta-gal activity was noted in P. shermanii 7 cells harvested after 28 h of growth at 32 C in sodium lactate broth. Sulfhydryl-group blocking agents inhibited enzyme activity in P. shermanii 22 CFE; the inhibition was partly reversed by dithiothreitol.