Galactooligosaccharides (GOSs) are prebiotics that have been shown to reduce colon cancer risk and enhance immunity. The GOSs can be formed enzymatically from whey lactose using β-galactosidase, but commercial application has been limited. Free-and immobilized-enzyme recycle batch processes were investigated and compared in this study. Optimum initial conditions were estimated using batch solutions. Using these optimum conditions, an ultrafiltration (UF) free-enzyme system was developed, and UF fluid pressure (100 to 400 p.s.i.) effect on enzyme performance was studied and compared with a 0 p.s.i. batch control. The optimum conditions were also used to develop an immobilized-enzyme process using polyethyleneimine (PEI), glutaraldehyde (GA), and cotton cloth. The PEI and GA immobilized agents were studied for their effect on enzyme inactivation. Finally, compatible free-and immobilized-enzyme recycle batch systems were compared for GOS production. Optimum initial enzyme conditions were estimated as 270 g/L initial lactose, 4.5 g/L initial enzyme (Aspergillus oryzae, 9400 U/g), and 30-min incubation. Fluid pressure within the free-enzyme UF membrane system had no significant effect on enzyme performance. The highly agitated UF enzyme system was found to be superior to the less agitated 0 p.s.i batch control. In the immobilization process, approximately 50% to approximately 90% enzyme inactivation was found with the combination of PEI and GA. Equivalent free-and immobilized-enzyme systems showed very similar maximum GOS production of approximately 22% and approximately 20% (w/v) at approximately 15 to 17 min, or 50% conversion for free-and immobilized-systems, respectively.