Epilactose (4-O-β-D-galactopyranosyl-D-mannose), an epimer of lactose, is a rare disaccharide existing extremely small quantities in heat-treated milk, in which epilactose is produced by non-enzymatic catalysis from lactose. This disaccharide is a kind of non-digestible carbohydrate, has a good prebiotic effect, and promotes intestinal mineral absorption. This article presents a review of recent studies on epilactose formation in food system, qualitative and quantitative analysis, and its physiological functions. In addition, the biochemical properties and kinetic parameters of the epilactose-producing enzyme, cellobiose 2-epimerase, are compared, and the biotechnological production of epilactose from lactose is reviewed.