Disaccharide-peptide conjugates were obtained in yields of 30-50% from o-nitrophenyl beta-D-galactopyranoside by employing beta-D-galactosidase from E. coli as catalyst. Two series of beta-D-galactosyldipeptides were examined as galactosyl acceptors. They both contain an L-serine residue beta-linked to the anomeric carbon of galactose. In the first series, serine is in the N-terminal position of the dipeptide; in the second series, serine is in the C-terminal position. The second amino acid is L-alanine or glycine. Some of our substrates gave a high yield of beta-(1-->3)-digalactosyldipeptide derivatives and all gave very little of the beta-(1-->6) regioisomer. The conditions and the limitations of the transgalactosylation reaction are discussed.