The gene encoding a thermostable β-galactosidase from Sulfolobus solfataricus was cloned and expressed in Escherichia coli. We investigated the enzymatic production of lactulose from lactose and fructose by this thermostable β-galactosidase. The optimum pH and temperature for lactulose production by the β-galactosidase were 6.0 and 80°C, respectively. In thermostability experiments, the enzyme followed first-order kinetics of thermal inactivation, and the half-lives of the enzyme at 75, 80, 85, 90, and 95°C were 91, 48, 35, 2.6, and 0.72h, respectively, suggesting that the enzyme is highly stable up to 85°C. Enzyme activity was increased by the addition of Fe 2+ and decreased by Ba 2+ . The optimum substrate and enzyme concentrations were 40% (w/v) lactose and 20% (w/v) fructose at 3.0 units/ml, respectively. Under the optimum conditions, the β-galactosidase from S. solfataricus produced approximately 50g/l lactulose in 6h of reaction time with a productivity of 8.3g/lh.