1-O-Acetyl-beta-D-galactopyranose (AcGal), a new substrate for beta-galactosidase, was synthesized in a stereoselective manner by the trichloroacetimidate procedure. Kinetic parameters (K(M) and k(cat)) for the hydrolysis of 1-O-acetyl-beta-D-galactopyranose catalyzed by the beta-D-galactosidase from Penicillium sp. were compared with similar characteristics for a number of natural and synthetic substrates. The value for k(cat) in the hydrolysis of AcGal was three orders of magnitude greater than for other known substrates. The beta-galactosidase hydrolyzes AcGal with retention of anomeric configuration. The transglycosylation activity of the beta-D-galactosidase in the reaction of AcGal and methyl beta-D-galactopyranoside (1) as substrates was investigated by 1H NMR spectroscopy and HPLC techniques. The transglycosylation product using AcGal as a substrate was beta-D-galactopyranosyl-(1-->6)-1-O-acetyl-beta-D-galactopyranose (with a yield of approximately 70%). In the case of 1 as a substrate, the main transglycosylation product was methyl beta-D-galactopyranosyl-(1-->6)-beta-D-galactopyranoside. Methyl beta-D-galactopyranosyl-(1-->3)-beta-D-galactopyranoside was found to be minor product in the latter reaction.