The gene encoding beta-galactosidase from dairy Streptococcus thermophilus strain LMD9 was cloned, sequenced and expressed in Escherichia coli. The recombinant enzyme was purified and showed high specific activity of 464 U/mg. This protein displays a homotetrameric arrangement composed of four 118 kDa monomers. Monitoring of the activity showed that this enzyme was optimally active at a wide range of temperatures (25-40 degrees C) and at pH from 6.5 to 7.5. Immobilization of the recombinant E. coli in alginate beads clearly enhanced the enzyme activity at various temperatures, including 4 and 50 degrees C, and at pH values from 4.0 to 8.5. Stability studies indicated that this biocatalyst has high stability within a broad range of temperatures and pH. This stability was improved not only by addition of 1 mM of Mn(2+) and 1.2 mM Mg(2+), but essentially through immobilization. The remarkable bioconversion rates of lactose in milk and whey at different temperatures revealed the attractive catalytic efficiency of this enzyme, thus promoting its use for lactose hydrolysis in milk and other dairy products.