D-Tagatose is a highly functional rare ketohexose and many attempts have been made to convert D-galactose into the valuable D-tagatose using L-arabinose isomerase (L-AI). In this study, a thermophilic strain possessing L-AI gene was isolated from hot spring sludge and identified as Anoxybacillus flavithermus based on its physio-biochemical characterization and phylogenetic analysis of its 16s rRNA gene. Furthermore, the gene encoding L-AI from A. flavithermus (AFAI) was cloned and expressed at a high level in E. coli BL21(DE3). L-AI had a molecular weight of 55,876 Da, an optimum pH of 10.5 and temperature of 95°C. The results showed that the conversion equilibrium shifted to more D-tagatose from D-galactose by raising the reaction temperatures and adding borate. A 60% conversion of D-galactose to D-tagatose was observed at an isomerization temperature of 95°C with borate. The catalytic efficiency (k (cat) /K (m)) for D-galactose with borate was 9.47 mM(-1) min(-1), twice as much as that without borate. Our results indicate that AFAI is a novel hyperthermophilic and alkaliphilic isomerase with a higher catalytic efficiency for D-galactose, suggesting its great potential for producing D-tagatose.