Hydrolyzes o-nitrophenyl-beta-D-galactopyranoside (ONPG) and p-nitrophenyl-beta-D-fucopyranoside (PNPF), but not p-nitrophenyl-beta-D-glucopyranoside (PNPG), p-nitrophenyl-beta-D-xylopyranoside (PNPX) or p-nitrophenyl-beta-D-arabinopyranoside (PNPA). Also hydrolyzes lactose, including lactose in milk. Hydrolysis of terminal non-reducing beta-D-galactose residues in beta-D-galactosides. Ca(2+), Mg(2+) and EDTA have little effect on enzyme activity at 1-10 mM. Zn(2+) at 3, 5, 7 or 10 mM inhibits activity by 20%, 30%, 40% and 65%, respectively. Optimum pH is 5.8. Approximately 80% of activity retained after incubating the enzyme for 40 minutes in buffers ranging from pH 5.0 to pH 10.5. Optimum temperature is 70 degrees Celsius. Retains 90% of activity when heated at 70 degrees Celsius for 30 minutes. Approximately 48% of lactose in milk is hydrolyzed following treatment with enzyme at 65 degrees Celsius over 60 minutes. Has potential use in hydrolyzing lactose in neutral pH dairy products such as whole milk or whey. Also could be used in milk lactose hydrolysis during pasteurization at high temperatures. Belongs to the glycosyl hydrolase 42 family.