Pellet formation and production of myceliaassociated fl-galactosidase were investigated in 15 Aspergillus and Penicillium strains. Mycelia-associated enzyme activity was measured in sonicated homogenates. The properties of the mycelia-associated fl-galactosidas6 of A. phoenicis QM 329 was investigated. The p H optim u m of the mycelia-associated enzyme was 4.0. The optimum temperature under assay conditions was 70°C and the optimum temperature for repeated lactose hydrolysis was 60 ° C. Repeated batch hydrolysis of lactose was made with pellets from five Aspergillus strains. A. phoenicis QM 329 showed the least enzyme leakage from the pellets during hydrolysis. From repeated lactose hydrolysis experiments it was estimated that 50% of the mycelia-associated fl-galactosidase activity remained after 1300 h.