A bacterial strain isolated from soil and identified as Enterobacter cloacae had been found to be capable of producing both intra and extracellular beta-d-galactosidase.The intracellular enzyme was thermostable and its optimum temperature, pH and time for enzyme-substrate reaction were found to be 50 A degrees C, 9.0 and 5 min respectively, using ONPG as substrate. The maximum beta-galactosidase production in shake flask was achieved at 30 A degrees C, pH 7.0, incubation time 72 h using 50 ml medium in 250 ml Erlenmeyer flask. Only Mg2+ stimulated the activity of enzyme. Cetyl trimethyl ammonium bromide showed stimulatory effect on catalytic activity of the enzyme whereas EDTA inhibited enzyme activity. The enzyme retained its activity upto 55 A degrees C after incubating at that temperature for 1 h.The maximum activity of crude intracellular enzyme was 14.35 IU/mg of protein. The K (m) and V (max) values of beta-galactosidase using ONPG as substrate at 50 A degrees C were 2.805 mM and 37.45 x 10(-3) mM/min/mg, respectively.