A novel, cold-active beta-galactosidase was isolated from an Arctic Gram-positive bacterium, Alkalilactibacillus ikkense. The corresponding gene was cloned and expressed as an active enzyme in Escherichia coli. Denaturing gel electrophoresis of both the native and the recombinant beta-galactosidase showed a monomeric molecular weight of 115-120 kDa. Analysis of the DNA sequence showed sequence similarity to known Glycosyl Hydrolase Family 2 beta-galactosidases from the genera Bacillus, Paenibacillus, Geobacillus, and Lactobacillus. The beta-galactosidase from this study was purified and shown to be highly active at low temperatures with more than 60% of its maximal activity maintained at 0 degrees C. The apparent optimal activity was observed at temperatures between 20 degrees C and 30 degrees C and at pH 8. The purified recombinant enzyme was stable without stabilizing agents for more than 100 hours at temperatures at and below 10 degrees C. At temperatures 40 degrees C and above, the beta-galactosidase was irreversibly inactivated within 10 minutes. When lactose was present in substantial amounts, the enzyme displayed transgalactosylation activity. Comparison of the beta-galactosidase with a commercially available enzyme showed that the conversion rate of the A. ikkense enzyme was approximately two-fold higher at temperatures between 0 degrees C and 20 degrees C.