In this study, we purified and molecularly characterized a cold-active beta-galactosidase from Arthrobacter psychrolactophilus strain F2. The purified beta-galactosidase from strain F2 exhibited high activity at 0 degrees C, and its optimum temperature and pH were 10 degrees C and 8.0, respectively. It was possible to inactivate the beta-galactosidase rapidly at 45 degrees C in 5 min. The enzyme was able to hydrolyze lactose as a substrate, as well as o-nitrophenyl-beta-D-galactopyranoside (ONPG), the Km values with ONPG and lactose being calculated to be 2.8 mM and 50 mM, respectively, at 10 degrees C. Moreover, the bglA gene encoding the beta-galactosidase of strain F2 was cloned and analyzed. The bglA gene consists of a 3,084-bp open reading frame corresponding to a protein of 1,028 amino acid residues. BglAp, the gene product derived from bglA, had several conserved regions for glycosyl hydrolase family 2, e.g., the glycosyl hydrolase 2 (GH2) sugar binding domain, GH2 acid-base catalyst, GH2 triosephosphate isomerase barrel domain, GH2 signature 1, and several other GH2 conserved regions. From these facts, we conclude that the beta-galactosidase from A. psychrolactophilus strain F2, which is a new member of glycosyl hydrolase family 2, is a cold-active enzyme that is extremely heat labile and could have advantageous applications in the food industry.