Lactose is a reducing sugar which is abundantly found in mammalian milk. Lactose intolerance affects more than 70% of the world population, being apparent by the absence of β-galactosidase enzyme, thus leading to the inability to consume dairy products. In the present work, Khoa was prepared from lactose hydrolysed milk and its physico-chemical, textural and microbiological quality were examined during storage at 5–7 °C for 28 days. The sensory quality of low lactose Khoa was comparable with that of the control Khoa up to the 14th day of storage. Significant differences (p < 0.05) between the acidity, hydroxyl methyl furfural (HMF) content, lightness, redness, springiness, chewiness and hardness values of the low lactose Khoa and the control Khoa were observed. The standard plate count (SPC), coliform and yeast and mould counts of the low lactose Khoa were within Food safety and standards authority of India (FSSAI) standards throughout the 28 days of storage. Therefore, the low lactose Khoa developed in this study had different physicochemical properties from the control sample with better shelf life.