D-Tagatose is an innovative natural low-calorie bulk sweetener with a broad potential for low-calorie and low-glycaemic foods and drinks. Production of this healthy sweetener is realized through enzymatic D-galactose isomerization. D-Galactose needs to be produced in situ due to its limited availability. Whey permeate contains a substantial amount of lactose, which is an interesting source for D-galactose production through enzymatic lactose hydrolysis. In this context, the cold-active beta-galactosidase from the psychrophile Pseudoalteromonas haloplanktis was studied. Optimal parameters for efficient lactose hydrolysis in whey permeate have been deduced, viz, optimal incubation temperature, pH and lactose concentration. Hydrolysis efficiencies above 96.0% were realized within 24 h at 23 degrees C and pH 7.0 in whey permeate with a maximum dry matter content of 10.0% (w/w). In addition, the effect of the presence of D-glucose and D-galactose was investigated up to concentrations of 100 gl(-1). D-Glucose inhibited lactose hydrolysis more strongly compared to D-galactose. Also, the operational stability of the cold-active beta-galactosidase was studied. Hydrolysis efficiencies above 90.0% were maintained during 7 subsequent hydrolysis cycles. (C) 2014 Elsevier Ltd. All rights reserved.