The -galactosidase from the Antarctic gram-negative bacterium Pseudoalteromonas haloplanktis TAE 79 was purified to homogeneity. The nucleotide sequence and the NH₂-terminal amino acid sequence of the purified enzyme indicate that the -galactosidase subunit is composed of 1,038 amino acids with a calculated M_r of 118,068. This -galactosidase shares structural properties with Escherichia coli -galactosidase (comparable subunit mass, 51% amino sequence identity, conservation of amino acid residues involved in catalysis, similar optimal pH value, and requirement for divalent metal ions) but is characterized by a higher catalytic efficiency on synthetic and natural substrates and by a shift of apparent optimum activity toward low temperatures and lower thermal stability. The enzyme also differs by a higher pI (7.8) and by specific thermodynamic activation parameters. P. haloplanktis -galactosidase was expressed in E. coli, and the recombinant enzyme displays properties identical to those of the wild-type enzyme. Heat-induced unfolding monitored by intrinsic fluorescence spectroscopy showed lower melting point values for both P. haloplanktis wild-type and recombinant -galactosidase compared to the mesophilic enzyme. Assays of lactose hydrolysis in milk demonstrate that P. haloplanktis -galactosidase can outperform the current commercial -galactosidase from Kluyveromyces marxianus var. lactis, suggesting that the cold-adapted -galactosidase could be used to hydrolyze lactose in dairy products processed in refrigerated plants.