Milk Bucket

Milk is a non-stacking item obtained from cows by right-clicking on the animal with a bucket. Milk had no purpose until Beta 1.2, when cake was added to the game. Three buckets of milk are required to craft cake, with empty buckets returned after being used in the process. Milk buckets can also be emptied by right-clicking on a block to pour out the milk. Note that milk unlike water or lava can not be placed to form lakes or rivers. When the bucket is emptied, its contents are lost and can not be picked up again.

You can milk cows easily if you are just one level below them. Cows can be milked an infinite number of times and will produce milk 100% of the time. It can be difficult to milk free-roaming cows especially on SMP with lag (which perpetuates the myth that milk production is random or that not all cows produce milk), but the easiest and most reliable way to milk a cow is to first trap it in a stall. A simple stall design consists of a 1 block wide water channel leading to a fence with a roof to prevent the cow from jumping out. Push a cow into the stream or wait for one to jump in and it will follow the water and be pressed against the fence. Standing 1 block away from the fence on the opposite side as the cow will allow for easy milking.

Trivia

 * In Beta 1.2_01, Squids could be milked if part of their body was exposed to air or if they were not touching another block. A squid's mouth had to be right clicked to do so. An easy way to accomplish this is to pull a squid with a fishing rod away from other blocks and then milking it. Squid milking was removed in a subsequent patch.