A new low-cost beta-galactosidase (lactase) preparation for whey permeate saccharification was developed and characterized. A biocatalyst with a lactase activity of 10 U/mg, a low transgalactosylase activity and a protein content of 0.22 mg protein/mg was obtained from a fermenter culture of the fungus Penicillium notatum. Factors influencing the enzymatic hydrolysis of lactose, such as reaction time, pH, temperature and enzyme and substrate concentration were standardized to maximize sugar yield from whey permeate. Thus, a 98.1% conversion of 5% lactose in whey permeate to sweet (glucose-galactose) syrup was reached in 48 h using 650 beta-galactosidase units/g hydrolyzed substrate. After the immobilization of the acid beta-galactosidase from Penicillium notatum on silanized porous glass modified by glutaraldehyde binding, more than 90% of the activity was retained. The marked shifts in the pH value (from 4.0 to 5.0) and optimum temperatures (from 50 degrees C to 60 degrees C) of the solid-phase enzyme were observed and discussed. The immobilized preparation showed high catalytic activity and stability at wider pH and temperature ranges than those of the free enzyme, and under the best operating conditions (lactose, 5%; beta-galactosidase, 610-650 U/g lactose; pH 5.0; temperature 55 degrees C), a high efficiency of lactose saccharification (84-88%) in whey permeate was achieved when lactolysis was performed both in a batch process and in a recycling packed-bed bioreactor. It seems that the promising results obtained during the assays performed on a laboratory scale make this immobilizate a new and very viable preparation of beta-galactosidase for application in the processing of whey and whey permeates.