Galactooligosaccharides (GOS), prebiotic nondigestible oligosaccharides derived from lactose, have the potential for improving mineral balance and bone properties. This study examined the dose–response effect of GOS supplementation on calcium and magnesium absorption, mineral retention, bone properties, and gut microbiota in growing rats. Seventy-five 4-week-old male Sprague–Dawley rats were randomized into one of five treatment groups (n = 15/group) and fed a diet containing 0, 2, 4, 6, or 8% GOS by weight for 8 weeks. Dietary GOS significantly decreased cecal pH and increased cecal wall weight and content weight in a dose-dependent manner (p < 0.0001). Fingerprint patterns of the 16S rRNA gene PCR-DGGE from fecal DNA indicated the variance of bacterial community structure, which was primarily explained by GOS treatments (p = 0.0001). Quantitative PCR of the samples revealed an increase in the relative proportion of bifidobacteria with GOS (p = 0.0001). Net calcium absorption was increased in a dose–response manner (p < 0.01) with GOS supplementation. Dietary GOS also increased (p < 0.02) net magnesium absorption, femur ⁴⁵Ca uptake, calcium and magnesium retention, and femur and tibia breaking strength. Distal femur total and trabecular volumetric bone mineral density (vBMD) and area and proximal tibia vBMD increased (p < 0.02) with GOS supplementation. Trabecular-rich bones, that is, those that rapidly turn over, were most benefited. Regression modeling showed that GOS benefited calcium and magnesium utilization and vBMD through decreased cecal pH, increased cecal wall and content weight, and increased proportion of bifidobacteria.