Lactose is the most abundant nonfat solid in milk and its properties present both opportunities and challenges for its presence in food and dairy products. Important properties that affect dairy ingredient use due to lactose are crystallization, stickiness, hygroscopicity, and reactions it participates in. Positive attributes of lactose include its low sweetness, low cost, and the ability to participate in non-enzymatic (Maillard) browning reactions because it is a reducing sugar. It is also important as a solids replacer to balance mouth feel and the solution properties in beverages, ice cream mixes, and the liquid phase during baking. The effect of lactose on the viscosity of the solution phase can alter the ability to hold gas during baking, and maintain ice crystal stability during the storage of frozen products. Thermodynamic parameters that are measured such as the glass transition (T_g), melting temperature (T_m) and temperature of crystallization (T_cr) are useful to evaluate the effects of processing and other ingredients on lactose state and stability. But in formulated food systems, it can be complicated to attribute the functional attributes entirely to these measured properties. This objective of this symposium talk is to focus on the challenges of using lactose in formulated foods, and what is understood about the important chemical, physical and thermodynamic properties involved in caking and crystallization. Challenges with using lactose in beverages, chocolate, frozen desserts and bars will be highlighted, as will methods to avoid undesirable changes to texture, viscosity and handling characteristics.