The catalytic wet oxidation of lactose to carbon dioxide/water and to a value-added product, lactobionic acid, has been demonstrated in a flow reactor. Lactose (milk sugar) is a low value byproduct of the dairy industry and makes up the largest part of the solids in cheese whey. Costs associated with cheese whey disposal are driving the need to develop alternative disposal methods. Pt/Al2O3, CeMn mixed-metal oxides, and Pt/CeMn catalysts have all been shown to effectively convert lactose to carbon dioxide and water at temperatures up to 443 K and pressures of 100 psig. Pt/CeMn demonstrated the lowest level of side-product formation. A BiPd/C catalyst was shown to convert essentially all lactose to lactobionic acid at similar temperature and pressure. Lactobionic acid selectivity was a strong function of oxygen concentration in the feed. The BiPd/C also produced a high yield of lactobionic acid at lower pH and higher temperatures than previously reported.