Catalyzes efficient hydrolysis of lactose. Also exhibits transglycosylation activity to produce oligosaccharides at low concentrations of glucose. In vitro, acts on the synthetic chromogenic substrate ortho-nitrophenyl-beta-D-galactopyranoside (ONPG). Acts exclusively on terminal beta-linked Gal residues. Hydrolysis of terminal non-reducing beta-D-galactose residues in beta-D-galactosides. Mg(2+) enhances the activity by 30%, followed by Ca(2+) and then Zn(2+). Activity is inhibited by EDTA. Activity is abolished by Cu(2+) and shows 59% reduction in the presence of Mn(2+) (PubMed:33427933). Lactose acts as a competitive inhibitor (PubMed:33427933). Optimum pH is 7.0 with ONPG as substrate. Retains 60% of its activity between pH 6.0 and 8.0. Optimum temperature is 37 degrees Celsius with ONPG as substrate. Retains 60% of its activity between 20 and 45 degrees Celsius. Possesses the industrially desirable properties of high substrate affinity for lactose and low product inhibition by galactose, and is an ideal candidate for dairy industry applications and prebiotic manufacture. Belongs to the glycosyl hydrolase 2 family.