Abstract Owing to the excellent catalytic potential, β-galactosidase (EC: 3.2.1.23) has been exploited as an important industrial enzyme for obtaining galactooligosaccharides (GOS) and lactose-free products in dairy industries. Moreover, novel technologies have been implemented in the recent past for preparing and modifying nanoparticles (NPs) for immobilizing therapeutically and industrially important enzymes. Nanoparticles based enzyme immobilization (NBEI) offered more stability and robustness to the enzymes due to their fixed conformation and hence extend their applications in broader areas. A quick overview of the results exhibited greater activity for the enzymes immobilized on NPs as compared to enzyme immobilized on 2-D matrices. Based on these findings, this review was aimed to emphasize the recent development achieved for immobilizing β-galactosidase on NPs with their specific utilization in obtaining dairy products. These studies includes β-galactosidases from various sources that were immobilized on various NPs for hydrolyzing lactose in batch and continuous reactors, and for the production of GOS in biotechnology industries. NBEI of β-galactosidase offered profound stability for transporting substrate and product for enzymatic reactions, apart from cost effective advantage due to reusable nature of immobilized enzyme.