A lactose-oxidizing enzyme was obtained from culture supernatant of a fungal strain of Paraconiothyrium sp. KD-3. The enzyme was a flavoprotein with a molecular mass of 54 kDa. The purified enzyme oxidized various monosaccharides and oligosaccharides such as D-glucose, D-galactose, D-xylose, cellooligosaccharides and maltooligosaccharides in addition to lactose, using molecular oxygen as a good electron acceptor, to accumulate the corresponding aldonic acids and hydrogen peroxide. The Paraconiothyrium enzyme was suitable for the production of calcium lactobionate compared with a commercial hexose oxidase owing to the stability during the conversion. The enzyme converted 10 20% (w v) lactose completely to calcium lactobionate in a 500-mL reactor under aeration, agitation and pH regulation at 5.5. The neutralization was successfully performed by the addition of 10% (w w) slurry of calcium carbonate, while neutralization with 25% (w v) sodium hydroxide solution inactivated the enzyme gradually. The supplement of catalase to the mixture promoted the conversion by degrading hydrogen peroxide. The immobilized enzyme, which was prepared by the adsorption to a cation exchange resin followed by the condensation with carbodiimide, oxidized 18.5% (w v) lactose to produce calcium lactobionate in a batch reaction. Calcium lactobionate and aldonates derived from D galactose, D-xylose and L-arabinose showed high aqueous solubility and low calcium binding capability.