[ ${eta}-Galactosidase$ ] is extensively employed in the manufacture of dairy products, including lactose-reduced milk. Here, we have isolated two gram-negative and rod-shaped coldadapted bacteria, BS 1 and HS 39. These strains were able to break down lactose at low temperatures. Although two isolates were found to grow well at $10^{circ}C$, the BS 1 strain was unable to grow at $37^{circ}C$. Another strain, HS-39, evidenced retarded growth at $37^{circ}C$. The biochemical characteristics and the results of 16S rDNA sequencing identified the BS 1 isolate as Rahnella aquatilis, and showed that the HS 39 strain belonged to genus Buttiauxella. Whereas the R. aquatilis BS 1 strain generated maximal quantities of ${eta}-galactosidase$ when incubated for 60h at $10^{circ}C$, Buttiauxella sp. HS-39 generated ${eta}-galactosidase$ earlier, and at slightly lower levels, than R. aquatilis BS 1. The optimum temperature for ${eta}-galactosidase$ was $30^{circ}C$ for R. aquatilis BS-1, and was $45^{circ}C$ for Buttiauxella sp. HS-39, thereby indicating that R. aquatilis BS-1 was able to generate a cold-adaptive enzyme. These two cold-adapted strains, and most notably the ${eta}-galactosidase$ from each isolate, might prove useful in some biotechnological applications.