For a long time, fermented dairy products have been consumed for human’s nutrition and health. Recently, consumption of whole dairy products, such as full fat yoghurt, has declined due to the awareness of probable harmful effects of fat on consumers’ health, resulting change of market interest in favor of low or non fat dairy products. It is a challenge for food scientists to produce a suitable fat substitute providing the functionality of the missing fat. The present investigation was carried out to examine the effect of 0 to 50% renneted skim milk (RSM) as a fat mimetic upon the physico-chemical, physical, rheological and sensory characteristics of nonfat yoghurt in comparison to control samples (full fat and skim yoghurt). By increasing RSM content, the chemical characteristics (titratable acidity, pH as well as the content of fat and total protein) of yoghurts did not alter except decrease of total solid in sample with 50% RSM. The yoghurts with more content of RSM exhibited higher b*and a* values, while the highest L* value, viscosity, water holding capacity (WHC), firmness and lowest syneresis were found in sample containing 30% RSM. It seems that new interaction in gel network of yoghurts containing RSM, exhibited greater ability to bind water than control skim yoghurt. In addition, probably new bridges between milk proteins (interacting partially hydrolyzed casein with casein) can increase the number of bounds between protein particles leading to lower syneresis. However, excessive RSM content (higher than 30%) did not increase the L* value, viscosity and WHC of samples probably because of too much aggregation of casein. Sensory results revealed that sample containing 30% RSM was exactly alike to full fat yoghurt in terms of overall sensory attributes. New formulation of palatable skim yoghurt was developed using 3% RSM successfully.