This study aimed to recognize the effect of Maillard reaction (MR) on the functional properties of milk proteins and the physiochemical, textural, and sensory properties of yoghurt. Heating at 100°C for 2 h increased the carbohydrate ratio in caseins, whey proteins, and total milk proteins from 2.83%, 1.93%, and 1.8% to 4.15%, 3.58%, and 5.32%, respectively. Solubility of the lactosylated caseins, whey proteins, and total milk proteins is increased at low pH values compared to that of the control caseins, whey proteins, and total milk proteins. Lactosylation at 70 and 100°C increased the emulsion activity index (EAI) of caseins at all pH values, especially at pH below 6, and this increment was higher for casein samples treated at 100°C. Foam volume of whey proteins and total milk proteins also increased for samples lactosylated at 100°C compared to control samples. The combination of heating and microbial transglutaminase (MTGase) had a synergistic and enhancing effect on the pH values of yoghurt samples, especially in yoghurt samples produced by whole milk protein compared to control samples. Viscosity and hardness of yoghurt samples were enhanced by heat lactosylation, MTGase treatment, and also storage for 21 days at 7 ± 1°C.