Dairy powders are an excellent source of high-quality protein, essential in the nutritional intake of children in the developing world. Challenging environmental conditions can result in detrimental quality losses. Lactose should be in the glassy state to ensure good functional properties. However, transportation and storage conditions can exceed critical relative humidity (RH) and temperature (T), resulting in the glassy amorphous lactose transforming into a rubbery amorphous and eventually crystalline state with detrimental effects on quality. There is currently a knowledge gap in understanding the nature of crystalline lactose formation - e.g. phase, size, and crystallization-kinetics – for (complex) dairy systems. We exposed a fat filled milk powder at five RHs, from 22.5% to 75.3%, and two Ts (25°C and 40°C) for 4 months. The functionality, i.e. reconstitution and suspension stability, was investigated. Surface morphology, chemistry and lactose crystallization were characterized using SEM, FTIR, XRD and DSC.