Lactose is the most underutilized dairy ingredient. Current applications of lactose are insufficient to use the recovered lactose from the manufacture of dairy products (cheese, Greek yogurt, and protein concentrate). As an ingredient, lactose offers technological challenges (poor solubility and low sweetness strength) and health concerns (malabsorption and digestive problems). It is critical to develop technological approaches that can help to expand lactose utilization. The objective of this work is to develop process for producing a mixture of natural sweeteners derived from lactose using a 2-step process. Aqueous lactose was converted into a sweetening syrup via enzymatic hydrolysis followed by catalytic isomerization over MgO/SiO₂. First, the enzymatic hydrolysis using β-galactosidase was performed at room temperature, and it converted 95.77 ± 0.67% of lactose into glucose and galactose. Second, the hydrolysed lactose solution was catalytically isomerized at 100°C for 2 h in the presence of MgO/SiO₂ containing different MgO loading ratios (10, 20, 30, and 40 wt.%). The prepared MgO/SiO₂ catalysts were characterized by BET, XRD, FTIR, CO2-TPD, and TEM. The highest isomerization yield of glucose and galactose to produce fructose and D-tagatose (26.8 ± 0.5 and 17.5 ± 0.5%, respectively) was obtained with 20% of MgO/SiO₂. The overall process (enzymatic hydrolysis followed by isomerization over MgO/SiO₂) converted 99.3 ± 0.2% of lactose into a sweetening syrup made of glucose (~30.48%), galactose (~33.51%), fructose (~16.92%), d-tagatose (~10.54%), lactulose (~3.62%), and unidentified byproducts (<0.69%). A reaction mechanism for the formation of a sweetening syrup from lactose via 2-step process was proposed. The outcomes of this research present an opportunity for expanding the utilization of lactose.