The possibility of using whey permeate as a raw material for the production of ethanol by continuous fermentation by using Kluyveromyces marxianus was examined. The ethanol formation was investigated as a function of the hydraulic retention time in a UASB reactor. The initial lactose concentration in permeate was 50.0 g L-1. The hydraulic retention time supplied were 12, 24, 48 h and the daily ethanol formations were 4.46, 8.61, 7.73 g L-1, respectively. The yield coefficient of ethanol was 0.089 g ethanol g-1 lactose when the hydraulic retention time was 12 h and raised to 0.325 g g-1 when the hydraulic retention time was as long as 48 h. The results indicated that in ethanol fermentation the hydraulic retention time should be 24 h to obtain high rates of ethanol formation and to avoid product inhibition.