Lactose utilization is one of the general biochemical characteristics of Escherichia coli, and the lac operon is responsible for this phenotype, which can be detected on lactose-containing media, such as MacConkey agar, after 24 h of incubation. However, some Shiga toxin-producing E. coli (STEC) O121:H19 strains exhibit an unusual phenotype called delayed lactose utilization (DLU), in which lactose utilization can be detected after 48 h of cultivation but not after only 24 h of cultivation. Insertion of an insertion sequence (IS), IS600, into the lacZ gene appears to be responsible for the DLU phenotype, and exposure to lactose has been reported to be necessary to observe this phenotype, but the mechanism underlying these phenomena remains to be elucidated. Here, we performed detailed analyses of the lactose utilization abilities of a set of O121:H19 strains and their mutants and found that IS-excision enhancer (IEE)-mediated excision of IS600 reactivates the lacZ gene and that the selective proliferation of IS-cured subclones in lactose-supplemented culture medium is responsible for the expression of the DLU phenotype. In addition, we analyzed the patterns of IS insertion into the lacZ and iee genes in the global O121:H19 population and revealed that while there are O121:H19 strains or lineage/sublineages that contain the IS insertion into iee or intact lacZ and thus do not show the DLU phenotype, most currently circulating O121:H19 strains contain IS600-inserted lacZ and intact iee and thus exhibit this phenotype. IMPORTANCE Insertion sequences (ISs) can modulate gene expression by gene inactivation or activation. While phenotypic changes due to IS insertion/transposition are frequently observed, gene reactivation by precise or simple IS excision rarely occurs. In this study, we show that IS600 is excised from the lacZ gene by IS-excision enhancer (IEE) during the cultivation of Shiga toxin-producing Escherichia coli (STEC) O121:H19 strains that show an unusual phenotype called delayed lactose utilization (DLU). This excision rescued their lactose utilization defect, and the subsequent selective proliferation of IS-cured subclones in lactose-containing medium resulted in the expression of the DLU phenotype. As we also show that most currently circulating O121:H19 strains exhibit this phenotype, this study not only provides information helpful for the isolation and identification of O121:H19 STEC but also offers novel insights into the roles of IS and IEE in the generation of phenotypic variation in bacterial populations.