The potential of β-galactosidase (β-GAL) and glucose isomerase (GLI) to enhance the sweetening power of lactose and to generate galactooligosaccharides (GOS) and lactulose was studied. UF-permeates of skim milk, sweet whey, acid whey and lactose solutions were incubated with β-GAL and GLI. Lactose hydrolysis (LH) was 96–99%, glucose isomerisation (GI) about 53%. On a scale from 0 to 5, the intensity of sweetness increased from 1 to 3. The bi-enzymatic process was also applied to yoghurt manufacture. Because of the inhibiting effect of calcium on GLI, the incubation was performed in UF-permeates of skim milk. LH in yoghurt was 94%, whereas GI was 36% on average. Whey syneresis in yoghurt decreased from 12% to 5%. The sweetness increased from 1.4 to 2.9 on average. Applying the bi-enzymatic system to 40% lactose solutions led to synthesis of about 20% prebiotic GOS. Products, such as 6-galactobiose, allolactose and 6-galactosyllactose were identified. About 1% lactulose was generated. Lactulose-derived oligosaccharides were not found.