The yeast Pityrosporum ovale, a skin saprophyte, will only grow if fatty acids of chain length greater than C(10) are added to the culture medium. 9-Hydroxypalmitic acid is the major product of metabolism of even-carbon-number fatty acids; 9-hydroxystearic acid is also found. The optimum pH for this conversion is pH4.5. The hydroxy fatty acids produced are found bound in a polar form in the aqueous phase of the culture medium. Growth of the organisms is facilitated by presentation of the substrate as a two-phase liquid system.