Lactobionic acid was first found in a Caucasian fermented milk product popularly known as "Caspian Sea yogurt" in Japan. The presence of lactobionic acid in the fermented milk was indicated by the results of both high-performance anion-exchange chromatographic analysis with pulsed amperometric detection and mass spectrometric analysis. Thereafter, the acid was purified from the yogurt and analyzed by nuclear magnetic resonance. A substantial amount of lactobionic acid was found to be accumulated in the upper layer of the yogurt, especially within 10 mm from the surface. A total of 45 mg of lactobionic acid per 100 g of the upper yogurt layer was collected after 4 d of fermentation. The annual intake of lactobionic acid in individuals consuming 100 g of the yogurt every day would be 0.5 to 1.0 g. A lactose-oxidizing bacterium was isolated from the fermented milk and was identified as Acetobacter orientalis. Washed A. orientalis cells oxidized monosaccharides such as d-glucose at considerable rates, although their activities for substrates such as lactose, maltose, and cellobiose were much lower. When A. orientalis cells were cultivated in cow's milk, they exhibited lactose-oxidizing activity, suggesting that this bacterium was the main organism involved in the production of lactobionic acid in the yogurt.