Hydrolyzes lactose, oNP-galactoside (oNPG), pNP-galactosidase (pNPG), pNP-mannoside, pNP-glucoside, pNP-fucoside, pNP-N-acetylglucosamide, but not pNP-arabinoside or 4-methylumbelliferyl-beta-galactopyranoside (MUG). Transgalactosylates lactose at 10 g/L, but not at 270 g/L. Hydrolysis of terminal non-reducing beta-D-galactose residues in beta-D-galactosides. Hydrolyzes lactose at pH 6.5, 6.8 and 7.2. Hydrolyzes lactose between 30-45 degrees Celsius. Belongs to the glycosyl hydrolase 42 family.