A recombinant thermostable beta-galactosidase from Bacillus stearothermophilus was immobilized onto chitosan using Tris(hydroxymethyl)phosphine (THP) and glutaraldehyde, and a packed bed reactor was utilized to hydrolyze lactose in milk. The thermostability and enzyme activity of THP-immobilized beta-galactosidase during storage was superior to that of free and glutaraldehyde-immobilized enzymes. The THP-immobilized beta-galactosidase showed greater relative activity in the presence of Ca(2+) than the free enzyme and was stable during the storage at 4 degrees C for 6 wk, whereas the free enzyme lost 31% of the initial activity under the same storage conditions. More than 80% of lactose hydrolysis in milk was achieved after 2 h of operation in the reactor. Therefore, THP-immobilized recombinant thermostable beta-galactosidase from Bacillus stearothermophilus has the potential for application in the production of lactose-hydrolyzed milk.