Ultra-high temperature (UHT) processed lactose-reduced milk containing added green tea extract (GTE) at two concentrations (0.1% and 0.25%) was stored at 22 ± 2 °C for one year. The effect of GTE addition on physical stability, protein binding, and sensory quality was evaluated. Sedimentation in skim milk and creaming of full fat milk were inhibited by addition of GTE. The formation of Maillard-related flavour compounds was inhibited during storage as determined by dynamic headspace GC–MS. Using Western blot analysis, milk proteins were found to be highly conjugated to polyphenols. Addition of GTE before UHT treatment resulted in increased bitterness and astringency in UHT milk and this remained during storage. Even though GTE addition improved the physical stability and inhibited Maillard reactions in the milk, the taste and flavour contribution from GTE was dominating throughout storage, and alternative sources of polyphenols should be explored for increasing shelf-life stability of long-life milk.