The enzyme P-galactosidase was purified from a cold-adapted organism isolated from Antarctica. The organism was identified as a psychrotrophic Pseudoalteromonas sp. The enzyme was purified with high yields by a rapid purification scheme involving extraction in an aqueous two-phase system followed by hydrophobic interaction chromatography and ultrafiltration. The P-galactosidase was optimally active at pH 9 and at 26 degreesC when assayed with o-nitrophenyl-beta-D-galactopyranoside as substrate for 2 min. The enzyme activity was highly sensitive to temperature above 30 degreesC and was undetectable at 40 degreesC. The cations Na+, K+, Mg2+ and Mn2+ activated the enzyme while Ca2+, Hg2+, Cu2+ and Zn2+ inhibited activity. The shelf life of the pure enzyme at 4 degreesC was significantly enhanced in the presence of 0.1% (w/v) polyethyleneimine. The pure P-galactosidase was also evaluated for lactose hydrolysis. More than 50% lactose hydrolysis was achieved in 8 h in buffer at an enzyme concentration of 1 U/ml, and was increased to 70% in the presence of 0.1% (w/v) polyethyleneimine. The extent of lactose hydrolysis was 40-50% in milk. The enzyme could be immobilized to Sepharose via different chemistries with 60-70% retention of activity. The immobilized enzyme was more stable and its ability to hydrolyze lactose was similar to that of the soluble enzyme.