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The present study investigates the synthesis of agarose nanoparticles (ANPs) and its surface modification by galactose for the immobilization of β-galactosidase. Galactose modified ANPs retained 91% enzyme activity upon immobilization. Optimum pH (4.5) and temperature (50 ºC) remains unchanged after immobilization. However, immobilized enzyme retained greater catalytic activity against lower and higher, pH and temperature ranges. Immobilized β-galactosidase retained 89% biocatalytic activity even at 4% galactose concentration as compared to enzyme in solution, and exhibited 81% activity even after seventh repeated uses. Immobilized enzyme hydrolyzed greater amount of lactose at higher temperatures as compared to β-galactosidase in solution, thereby suggesting its potential application in obtaining lactose-free dairy products at large scale.