Despite the highly nutritious profile of milk, a large chunk of the population in the world remains deprived of it owing to lactose intolerance. Thus, the production of lactose-hydrolyzed dairy products is a burgeoning field of research due to the rising prevalence of lactose intolerance worldwide. The market for these products continues to grow, with an increasing demand for lactose-free alternatives that taste as good as conventional dairy products. In the ever-evolving landscape of the food industry, lactose-hydrolyzed dairy products offer a bridge between the needs of lactose-intolerant consumers and their desire for delicious, nutritious dairy items. It may also be noted, that the lactose-free dairy industry is witnessing a whooping rate of rise of approximately three-folds with respect to the conventional dairy industry. This chapter delves deep into the various production aspects of lactose hydrolysed dairy products which includes the techniques as well the bottlenecks associated with it. This chapter also sheds light on the advanced procedures and technologies that include the use of membrane filtration, immobilised enzymes, fermentation and genetic engineering to remove lactose that is being used by dairy businesses and manufacturers at present. Furthermore, manufacturing processes and physico-chemical properties of various lactose-hydrolyzed dairy products have been discussed through a thorough analysis of the current literature, to cater to the readers to comprehend the significance of lactose-hydrolyzed dairy products in the food industry. As technology and consumer preferences continue to evolve, this chapter has laid a strong foundation for understanding the production and potential benefits of lactose-hydrolyzed dairy products in meeting the diverse dietary requirements of the modern world.