High-shear granulation is an attractive alternative to spray drying for producing dried milk products. The capital cost of a granulation circuit is likely to be much less than a spray drying circuit which will reduce the manufacturing costs of milk powders. This work investigated the high-shear granulation of milk powder using milk concentrate as a binding agent in order to determine the feasibility of granulation as an alternative to, or and improvement on, the spray drying process. This research has laid the groundwork for further investigation into milk granulation by defining the conditions for which granulation is achieved and describing the effects of processing parameters on granulation for a pilot-scale mixer granulator. The technical feasibility of granulation is shown by proving that granulation does not affect the quality of the milk. Designs for perceived continuous granulation circuits are included to aid in further milk granulation research. Successful granulation occurs at a total moisture content of approximately 11% (±1%). This was found to be suitable using either reconstituted or evaporated milk concentrated binder at between 20 and 50% total solids. The time of granulation affects the size distribution of the granules and the granule yield at the end of the process. A narrower size distribution with increasing granule sizes and a reduction in the granule yield is observed for longer granulation times. Granules were found to have better handling qualities than spray dried milk powders. Granules performed better in many functional tests having a higher bulk density, less change in bulk density during handling, better flowability and less fines. Granulation does not affect the chemical quality of the milk providing the granules are dried immediately after granulation. However, it was found that extended exposure of dried milk solids to a moisture content of 11% results in an unacceptable amount of insoluble material forming. Granules are well suited as a product for reconstitution but did not perform adequately in wettability tests, suggesting that their use as an instantised product would require further study and improvement. Further research is required to understand the role of lactose crystallisation and the generation of insoluble material to ensure scaling up of granulation will be successful. An investigation into continuous granulation would be useful for further milk granulation work.