Lactic acid bacteria are the predominated cultures in fermented dairy products. These bacteria primarily used for acidification of milk and covert them into different valuable foods. They also produced different secondary metabolites like bacteriocin applied as natural preservatives. In the present investigation, these lactic acid bacteria were isolated and characterized for the bacteriocin production and their metabolic compounds were applied for the bio preservation of dairy products. In the first phase, isolated lactic acid bacteria were categorized in three genera as lactobacilli (71%), followed by streptococci (24%) and lactococci (5%) and eleven different species. The species of these bacteria were Lactobacillus bulgaricus (17.5%), Lactobacillus acidophilus (16.3%) and Streptococcus thermophilus (13.8%). In the second phase, all identified strains of lactic acid bacteria were screened for their antibacterial activity and it was observed that three species via L. acidophilus LA06FT, L. bulgaricus TLB06FT and S. thermophilus S02FT have maximum inhibitory effects against different food pathogens. The maximum yield of bacteriocin was obtained on growth media containing 1% tryptone, NaCl, tween 80 and yeast extract and 2% glucose or lactose at 37 o C . After optimizing the growth conditions for these three selected strains, their probiotic potential was explored and it was observed that L. acidophilus LA06FT survived in 2-3% bile salts for the period of 6h but L. bulgaricus TLB06FT and S. thermophilus S02FT can only remain viable in 1% bile salt concentration. Furthermore, bacteriocin produced by L. acidophilus LA06FT was heat resistant at 90 o C, inhibited by proteinases, performed well over a wide range of pH (3.5-7.5). The bacteriocin produced by L. acidophilus LA06FT was further purified initially by micro-filtration and then 12 precipitation by ammonium sulfate and dialysis through 12000 Da cut-off membranes having molecular weight (8.5 kDa). In the third phase molecular characterization of selected probiotic strains was carried out. Firstly, protein profile of all selected strains was determined and it was observed that L. acidophilus have 6 prominent bands at 80, 62.2, 45, 35, 24 and 14.4 kDa along some minor ones. L. bulgaricus had shown nine prominent bands at 14, 18, 25, 38, 37, 48, 50, 62 and 69 kDa along some minor one. Similarly, S. thermophilus revealed 9 to 14 protein bands. In order to determine the similarity index among the collected strains hierarchal clusters analysis was carried out. Plasmid isolation and its restriction digestion were also performed and it was observed that some bacteriocin producing strains have single prominent band of 10 kbp. In addition, amplification of 16S rDNA regains of these strains was carried out by species-specific primers and using their genomic DNA as template to get PCR products of approximately 200bp to 250bp. In the last phase, probiotic yoghurt was made in three combinations by using L. acidophilus LA06FT, L. bulgaricus TLB06FT, S. thermophilus S02FT being high bacteriocin producer and appreciable probiotic properties along with control. It was observed in a preparation Y3(1:1:1) stood best for all set parameters. In the second part of this phase, cellulose based packaging sheet was developed by coating with the purified bacteriocin and subsequently wrapping of butter whereas cellulose sheet without anti-microbial compound was used as control. It was noted that acidity, pH and viable count of control sample changed significantly during storage indicating high level of microbial activities as compared to coated one. In conclusion, dahi is a rich source of probiotic lactic bacteria that produced different antibacterial compounds effective against food borne pathogens. Results obtained were also help to modified the traditional preservation methods in which bacteriocin was applied along with cellulose packaging.