In this work, the production and downstream processing of gellan gum obtained from milk skin residue (MSR) as a carbon source was investigated. The different medium variables, namely shaking speed, inoculum size, and nitrogen source, on gellan gum production were studied. The suitable medium variables were found to be shaking speed (150 rpm); inoculum size (5% v/v), and nitrogen source (yeast extract, YE). The production of gellan gum was compared for various carbon sources, namely fructose, sucrose, glucose, lactose, and MSR. In order to obtain higher gellan gum concentration, response surface methodology was employed for optimizing MSR to glucose ratio, initial pH, and yeast extract concentration. The maximum gellan gum concentration of 8.98 ± 0.42 g/L was obtained at the following optimum conditions: ratio of MSR and glucose = 1:0.743, initial pH (7.5), and yeast extract concentration 8 g/L. The concentration of gellan gum was increased by 2.73-fold than un-optimized medium. The various factors influencing the recovery of gellan gum, namely screening of solvents, ratio of solvent to supernatant (v/v), and incubation time for precipitation, were also studied. The purified gellan gum was characterized by thermogravimetric analysis (TGA/DSC), Fourier transform infrared spectroscopy, scanning electron microscope, and X-ray diffraction analysis.