The potential applications of immobilized cell technology (ICT) to the dairy industry are examined. Immobilization modifies the physiology of cells, and the consequences of ICT on lactose as well as citrate metabolism are reviewed. Immobilization also affects the sensitivity of lactic acid bacteria (LAB) to salt and penicillin. ICT can be used to produce starters for the dairy industry, and aspects of biomass production in beads, continuous cell release from beads, and continuous fermentations with filtration cell recycle are examined. Potential applications of ICT to the dairy industry include acidification of raw milk prior to ultrafiltration, inhibition of psychrotrophic bacteria in raw milk, yogurt production, cheese manufacture, and cream fermentations. Impacts of yeast, bacterial, or bacteriophage contaminations in ICT processes as well as their control are discussed.