The objective of this study was to examine the effect of Versagel on the growth and proteolytic activity of Streptococcus thermophilus 1275 and Lactobacillus delbrueckii ssp. bulgaricus 1368 and angiotensin-I converting enzyme inhibitory activity of the peptides generated thereby as well as on the physical properties of low-fat yogurt during a storage period of 28 d at 4 degrees C. Three different types of low-fat yogurts, YV0, YV1, and YV2, were prepared using Versagel as a fat replacer. The fermentation time of the low-fat yogurts containing Versagel was less than that of the control yogurt (YV0). The starter cultures maintained their viability (8.68 to 8.81 log CFU/g of S. thermophilus and 8.51 to 8.81 log CFU/g of L. delbrueckii ssp. bulgaricus) in all the yogurts throughout the storage period. There was some decrease in the pH of the yogurts during storage and an increase in the concentration of lactic acid. However, the proteolytic and ACE-inhibitory potential of the starter cultures was suppressed in the presence of Versagel. On the other hand, the addition of Versagel had a positive impact on the physical properties of the low-fat yogurt, namely, spontaneous whey separation, firmness, and pseudoplastic properties.