The conversion of oleic acid to 10-hydroxystearic acid with resting cells of Nocardia cholesterolicum (NRRL 5767) has been previously reported. These same microorganisms also convert linoleic and linolenic acids to 10-hydroxy-12c-octadecenoic and 10-hydroxy-12c,15c-octadecadienoic acids, respectively. The reaction occurs best at 35-degrees-C and a pH of 6.5. Under optimum conditions, 75-80% of the unsaturated fatty acid substrate is converted to the corresponding hydroxy acid. The hydroxy products were characterized by gas chromatography, gas chromatography-mass spectrometry, nuclear magnetic resonance (NMR) and infrared (IR) spectroscopy. Other microorganisms that successfully converted these substrates include another strain of Nocardia cholesterolicum (NRRL 5768) and Nocardia sp. (NRRL 5636).