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A λ-graph system is a labeled Bratteli diagram with shift transformation. It is a generalization of finite labeled graphs and presents a subshift. In [Doc. Math. 7 (2002), 1–30], the author introduced a C*-algebra associated with a λ-graph system as a generalization of the Cuntz–Krieger algebras. In this paper, we study a functorial property between factor maps of λ-graph systems and inclusions of the associated C*-algebras with gauge actions. We prove that if there exists a surjective left-covering λ-graph system homomorphism , there exists a unital embedding of the C*-algebra into the C*-algebra compatible to its gauge actions. We also show that a sequence of left-covering graph homomorphisms of finite labeled graphs gives rise to a λ-graph system such that the associated C*-algebra is an inductive limit of the Cuntz–Krieger algebras for the finite labeled graphs.