In addition to lactose induction, the lactose operon is controlled
by catabolite repression.
In the absence of glucose, E. coli uses the enzyme, adenylate cyclase, to
convert ATP to cyclic-AMP.
When abundant, cyclic-AMP binds to the catabolite
activator protein, (called CAP, the product of the crp gene). This changes
the conformation of CAP so that it becomes active-- that is, CAP can then
bind near the promoter regions of a number of sugar-utilizing genes, including
the lactose operon.

Without CAP, RNA polymerase does not fit well to the promoter sites of these genes, and the genes are only transcribed at a very, very low level.

When glucose is present, it not only inhibits the production of cyclic-AMP
but glucose also enhances the transport of cyclic-AMP out of the cell. This
causes the concentration of cyclic-AMP to fall dramatically. Without cyclic-AMP,
CAP cannot bind near the promoter sites of the various sugar utilizing genes,
RNA polymerase will not bind to the promoter sites, and the genes will not
be transcribed (and translated).
So, the lactose operon can only be "turned on" when there is lactose
in the environment, but NO glucose.
Now that you've read about it, watch the catabolite repression animation!