Genome shuffling has been a recently effective method for screening the desirable phenotypes of industrial strains. Here, we combined genome shuffling and gentamicin resistance to improve the production of ε-poly-L-lysine in Streptomyces albulus W-156. Five starting mutants with higher ε-poly-L-lysine (ε-PL) productivities were firstly obtained by atmospheric and room temperature plasma (ARTP) mutagenesis. After three rounds of genome shuffling with increasing concentration of gentamicin for selection, S. albulus AG3-28, was finally got with a production of 3.43 g/L in shaking flask. In a 5-L fermenter, AG3-28 exhibited a higher ε-PL productivity (56.5 g/L) than the initial strain W-156 (37.5 g/L). Key enzyme activities in primary and secondary metabolic pathways were analyzed, and the transcription levels of hrdD and pls were determined by quantitative real time-polymerase chain reaction (qRT-PCR). Increase of key enzyme activities and the upregulation of the gene transcriptional levels demonstrated that ε-PL synthetic pathway in AG3-28 was obviously strengthened, which might be responsible for the high productivity. Moreover, hyper-yield strain AG3-28 was found to produce a slightly lower ε-PL polymerization degree than the parent strain. Amplified fragment length polymorphism (AFLP) analysis reflects the genetic diversity among the derivates after genome shuffling.