Two β-galactosidases, β-gal I and β-gal II, from Bifidobacterium breve DSM 20213, which was isolated from the intestine of an infant, were overexpressed in Escherichia coli with co-expression of the chaperones GroEL/GroES, purified to electrophoretic homogeneity and biochemically characterized. Both β-gal I and β-gal II belong to glycoside hydrolase family 2 and are homodimers with native molecular masses of 220 and 211 kDa, respectively. The optimum pH and temperature for hydrolysis of the two substrates o-nitrophenyl-β-D-galactopyranoside (oNPG) and lactose were determined at pH 7.0 and 50°C for β-gal I, and at pH 6.5 and 55°C for β-gal II, respectively. The kcat/Km values for oNPG and lactose hydrolysis are 722 and 7.4 mM-1s-1 for β-gal I, and 543 and 25 mM-1s-1 for β-gal II. Both β-gal I and β-gal II are only moderately inhibited by their reaction products D-galactose and D-glucose. Both enzymes were found to be very well suited for the production of galacto-oligosaccharides with total GOS yields of 33% and 44% of total sugars obtained with β-gal I and β-gal II, respectively. The predominant transgalactosylation products are β-D-Galp-(1→6)-D-Glc (allolactose) and β-D-Galp-(1→3)-D-Lac, accounting together for more than 75% and 65% of the GOS formed by transgalactosylation by β-gal I and β-gal II, respectively, indicating that both enzymes have a propensity to synthesize β-(1→6) and β-(1→3)-linked GOS. The resulting GOS mixtures contained relatively high fractions of allolactose, which results from the fact that glucose is a far better acceptor for galactosyl transfer than galactose and lactose, and intramolecular transgalactosylation contributes significantly to the formation of this disaccharide.