The present study demonstrates the synthesis of lactose-free dairy items by Kluyveromyces lactis β-galactosidase bound to polyvinyl alcohol (PVA)-modified gold nanoparticles (AuNPs). The size of AuNPs was analyzed by dynamic light scattering experiment. The developed AuNPs served as a stable matrix for enzyme immobilization which was observed by obtaining 88% immobilization yield. Km and Vmax were determined for soluble and immobilized enzyme by incubating them with varying concentrations of substrate. Our findings demonstrated that immobilization leads to an increase of Km and a decline in Vmax values for the enzyme attached to PVA-functionalized AuNPs. Moreover, the enzyme conjugated to surface functionalized AuNPs displayed exceptional conversion of lactose hydrolysis in batch reactors at 40 oC in contrast to its hydrolysis at 50 oC. Hence, the developed nanosystem [β-galactosidase-(PVA-modified AuNPs)] serves as an excellent model for suggesting its application in other biomedical applications, particularly for constructing lactose based biosensors.