A ${eta}$-galactosidase with high transgalactosylic activity was purified from a Bacillus species, registered as KFCC10855. The enzyme preparation showed a single protein band corresponding to a molecular mass of 150 kDa on SDS-PAGE and gave a single peak with the estimated molecular mass of 250 kDa on Sephacryl S-300 gel filtration, suggesting that the enzyme is a homodimeric protein. The amino acid and sugar analyses revealed that the enzyme is a glycoprotein, containing 19.2 weight percent of sugar moieties, and is much more abundant in hydrophilic amino acid residues than in hydrophobic residues, the mole ratio being about 2:1. The pI and optimum pH were determined to be 5.0 and 6.0, respectively. Having a temperature optimum at $70^{circ}C$ for the hydrolysis of lactose, the enzyme showed good thermal stability. The activity of the enzyme preparation was markedly increased by the presence of exogenous Mg (II) and was decreased by the addition of EDTA. Among the metal ions examined, the most severely inhibitory effect was seen with Ag (I) and Hg (II). Further, results of protein modification by various chemical reagents implied that 1 cysteine, 1 histidine, and 2 methionine residues occur in certain critical sites of the enzyme, most likely including the active site. Enzyme kinetic parameters, measured for both hydrolysis and transgalactosylation of lactose, indicated that the enzyme has an excellent catalytic efficiency for formation of the transgalactosylic products in reaction mixtures containing high concentrations of the substrate.