Fermented foods and beverages possess various nutritional and therapeutic properties. Lactic acid bacteria (LAB) play a major role in determining the positive health effects of fermented milks and related products. The L. acidophilus and Bifidobacteria spp are known for their use in probiotic dairy foods. Cultured products sold with any claim of health benefits should meet the criteria of suggested minimum number of more than 10⁶ cfu/g at the time of consumption. Yoghurt is redefined as a probiotic carrier food. Several food powders like yoghurt powder and curd (dahi) powder are manufactured taking into consideration the number of organisms surviving in the product after drying. Such foods, beverages and powders are highly acceptable to consumers because of their flavor and aroma and high nutritive value. Antitumor activity is associated with the cell wall of starter bacteria and so the activity remains even after drying. Other health benefits of fermented milks include prevention of gastrointestinal infections, reduction of serum cholesterol levels and antimutagenic activity. The fermented products are recommended for consumption by lactose intolerant individuals and patients suffering from atherosclerosis. The formulation of fermented dietetic preparations and special products is an expanding research area. The health benefits, the technology of production of fermented milks and the kinetics of lactic acid fermentation in dairy products are reviewed here.