ArthbetaDG is a dimeric, cold-adapted beta-D-galactosidase that exhibits high hydrolytic\nand transglycosylation activity. A series of crystal structures of its wild form, as well as its ArthbetaDG_E441Q mutein complexes with ligands were obtained in order to describe the mode of its action. The ArthbetaDG_E441Q mutein is an inactive form of the enzyme designed to enable observation of enzyme interaction with its substrate. The resulting three-dimensional structures of complexes: ArthbetaDG_E441Q/LACs and ArthbetaDG/IPTG (ligand bound in shallow mode) and structures of complexes ArthbetaDG_E441Q/LACd, ArthbetaDG/ONPG (ligands bound in deep mode), and galactose ArthbetaDG/GAL and their analysis enabled structural characterization of the hydrolysis reaction mechanism. Furthermore, comparative analysis with mesophilic analogs revealed the most striking differences in catalysis mechanisms. The key role in substrate transfer from shallow to deep binding mode involves rotation of the F581 side chain. It is worth noting that the 10-aa loop restricting access to the active site in mesophilic GH2 betaDGs, in ArthbetaDG is moved outward. This facilitates access of substrate to active site. Such a permanent exposure of the entrance to the active site may be\na key factor for improved turnover rate of the cold adapted enzyme and thus a structural feature\nrelated to its cold adaptation.