Hyperspectral imaging (HSI) in the spectral range of 400–1000 nm was tested to differentiate three different particle size fractions of milk powder. Partial least squares discriminant analysis (PLS-DA) was performed to observe the relationship of spectral data and particle size information for various samples of instant milk powder. The PLS-DA model on full wavelengths successfully classified the three fractions of milk powder with a coefficient of prediction 0.943. Principal component analysis (PCA) identified each of the milk powder fractions as separate clusters across the first two principal components (PC1 and PC2) and five characteristic wavelengths were recognised by the loading plot of the first three principal components. Weighted regression coefficient (WRC) analysis of the partial least squares model identified 11 important wavelengths. Simplified PLS-DA models were developed from two sets of reduced wavelengths selected by PCA and WRC and showed better performance with predictive correlation coefficients (Rp2) of 0.962 and 0.979, respectively, while PLS-DA with complete spectrum had Rp2 of 0.943. Similarly, classification accuracy of PLS-DA was improved to 92.2% for WRC based predictive model. Calculation time was also reduced to 2.1 and 2.8 s for PCA and WRC based simplified PLS-DA models in comparison to the complete spectrum model that was taking 32.2 s on average to predict the classification of milk powder samples. These results demonstrated that HSI with appropriate data analysis methods could become a potential analyser for non-invasive testing of milk powder in the future.