The enzyme β-galactosidase has tremendous potential in research and application in various fields like food, bioremediation, biosensor, diagnosis and treatment of disorders. The sources of the β-galactosidase are microorganisms, plants and animals. β-galactosidase producing bacteria was isolated from milk and milk products. Bacteria were tested for their ability to hydrolyze 5- bromo-4-chloro-3-indolyl-β-D-galactosidase (X-Gal) and O-nitro phenyl-β-D-galactopyranoside (ONPG). Further, it was characterized by biochemical and molecular methods.