The effect of using exopolysaccharide(EPS)-producing Streptococcus thermophilus on the chemical, textural and sensory characteristics of Labneh (concentrated yoghurt) was studied. Labneh was prepared from full-fat, half-fat and quarter-fat buffalo's milk by using EPS-producing S. thermophilus strain and its isogenic EPS-nonproducing mutant culture. The use of EPS-producing starter was generally associated with higher moisture and moisture in non-fat substance (MNFS) contents and higher pH values in resultant Labneh. EPS also increased water-holding capacity (WHC) of Labneh prepared from full-fat and half-fat buffalo's milk compared with their counterpart products prepared with EPS-nonproducing starter. However, EPS improved the textural and sensory characteristics of only reduced-fat Labneh with insignificant differences (P<0.05) in examined properties between full-fat and half-fat Labneh prepared with EPS-producing and EPS-nonproducing S. thermophilus. It was suggested that mechanisms other than the basic ability of EPS to cause water retention may be involved in the improving effect of EPS on textural and sensory characteristics of reduced-fat Labneh. These mechanisms may include the interfering effect of EPS on protein-protein interactions that could soften the curd and improve textural and sensory characteristics.