Sensitive and selective quantification of individual sugars in complex media is technically challenging and usually requires HPLC separation. Accurate measurement without the need for separation would be highly desirable. The measurement of trace levels of lactose in lactose-reduced milk exemplifies the problem, with the added challenge that trace lactose must be measured in the presence of ≈140 mM glucose and galactose, the products of lactase digestion of lactose. Biosensing is an alternative to HPLC, but current biosensing methods, based on coupled-enzyme assays, tend to have poor sensitivity and complex biochemistry and can be time-consuming. We explored a fundamentally different approach, based on identifying a lactose-specific binding protein compatible with photonic transduction. We identified the BgaR transcriptional regulator of Clostridium perfringens, which is highly selective for lactose, as a suitable ligand binding domain and combined it with a bioluminescence energy resonance transfer transduction system. This BRET-based biosensor showed a 27% decrease in the BRET ratio in the presence of saturating (1 mM) lactose. Using a 5 min assay, the half maximal effective concentration (EC50) for lactose in phosphate-buffered saline (PBS) was 12 μM. The biosensor was 200 times more sensitive to lactose than to glucose or galactose. Sensitivity and selectivity were not significantly affected by the presence of 10% (v/v) dialyzed milk. The biosensor is suitable for direct determination of residual lactose in lactase-treated milk, with a limit of detection of 0.2 μM, 100 times below the most stringent lactose-free standard and without the need to remove fat or protein from the sample.