A novel strain of Bifidobacterium bifidum NCIMB 41171, isolated from a faecal sample from a healthy human volunteer and able to express beta-galactosidase activity, was used in synthesis reactions for the production of galactooligosaccharide from lactose. The beta-galactosidase activity of whole bifidobacterial cells showed an optimum activity at pH 6.8-7.0 and 40 degrees C. The transgalactosylation activity of the B. bifidum cells from 50% (w/w) lactose resulted in a galactooligosaccharide mixture (20% w/w) comprising (w/w): 25% disaccharides, 35% trisaccharides, 25% tetrasaccharides and 15% pentasaccharides. Using different initial lactose concentrations, the conversion rate to galactooligosaccharides was maximum (35%) when 55% (w/w) lactose was used. In fermentation experiments, B. bifidum showed an increased preference towards the produced galactooligosaccharide mixture, displaying higher growth rate and short-chain fatty acid production when compared with commercially available oligosaccharides.