A strain YB-10 was isolated from soil as a producer of the extracellular $eta$-D-galactosidase, which catalyzes the hydrolysis of lactose. The strain YB-10 was identified as Streptomyces sp. on the basis of its cultural, morphological and physiological properties. After treating culture supernatant of the isolate with ammonium sulfate, the precipitated protein was used as a crude $eta$-galactosidase for analyzing its reaction properties with para-nitrophenyl-$eta$-D-galactosidase(pNP-$eta$Gal) as a substrate. The $eta$-galactosidase showed its maximal activity at pH 6.0 and 6$0^{circ}C$. The enzyme was also active on lactose. The hydrolyzing activity of $eta$-galactosldase for pNP-$eta$Gal and lactose was decreased by galactose. Its hydrolyzing activity far lactose was also decreased by glucose, but the activity for pNP-$eta$Gal was increased to 1.8-folds by glucose.