Commercial yogurt powder has to go through drying process which kills the yogurt culture, so the health benefit of the yogurt culture bacteria are lost. Also, upon reconstitution commercial yogurt powder does not taste like yogurt, it is sour and off flavored. The hypothesis of this study was that yogurt cultured milk powder would have better culture bacterial counts, better physico-chemical and sensory characteristics than commercial yogurt powder currently available. Commercial yogurt powder (CYP) was the control and yogurt cultured milk powder (YCMP) was the treatment. Freeze-dried yogurt starter culture (Lactobacillus bulgaricus and Streptococcus thermophilus at ratio 1:1) was added to milk powder at 107 cfu/g upon reconstitution. Microbial and physico-chemical characteristics of the reconstituted CYP and YCMP were analyzed daily for the first week and then weekly for a period of 8 weeks (at 1, 2, 3, 4, 5, 6, 7, 14, 21, 28, 35, 42, 49 and 56 days) after reconstitution. Three replications of each treatment were conducted. Sensory consumer testing of CYP and YCMP upon reconstitution was conducted with 100 panelists. Data were analyzed by Proc GLM of Statistical Analysis System. YCMP had 5 log cfu/ml higher counts of Streptococcus thermopilus compared to the control (CYP) at 56 days. Also, Lactobacillus bulgaricus counts of YCMP at 28 days was 6.55 log cfu/ml and at 56 days was 5.35 log cfu/ml while the CYP at 28 days onwards had no counts. YCMP had significantly higher apparent viscosity, pH, L*, appearance, sensory color, aroma, taste, thickness, overall liking, consumer acceptability and purchase intent compared to CYP.