Galactooligosaccharides (GOS) are prebiotics commonly produced from lactose via an enzymatic reaction catalyzed by β-galactosidase (β-gal) which is present in many organisms, including microalgae. Whey permeate (WP), a major byproduct of the dairy industry rich in lactose, represents an interesting medium for producing GOS as high value-added ingredients. Using the microalgae Tetradesmus obliquus as the enzyme source could be an interesting alternative due to its lower nutritional requirements for growth and its applicability in industry. Therefore, this study investigates the growth of T. obliquus and its potential to produce GOS in WP compared to modified Bold's Basal medium (BBM). The growth kinetics, β-gal activity, and medium composition, such as minerals, lactose, glucose, galactose and GOS concentrations, were evaluated during algal cultivation for up to 21 days. The growth rate of T. obliquus was significantly higher in WP, reaching a biomass concentration 4.5 times higher than when growing in BBM. The growth stimulation in WP is directly proportional to the concentration of minerals and ionic species in WP compared to BBM, except for nitrate. The lactose concentration decreased significantly (by 21%) in WP only, with substantial production of the simple carbohydrates, glucose (3.1 g/L) and galactose (4.1 g/L). The higher degree of lactose hydrolysis in WP was supported by significantly higher β-gal specific activity and volumetric productivity. In addition, we detected, for the first time, the production of a trisaccharide GOS in WP whose concentration increased with time, reaching 4.4 g/L and conversion yield of 8.4% (w/w of initial lactose) after 21 days. Overall, these results hold promise for developing a novel bioprocess for the production of value-added products from WP, but the microalgal enzyme must first be characterized and optimized.