We isolated from soil 160 bacterial strains which are tolerant to high concentrations of oleic acid, and examined their ability to transform oleic acid to new fatty acid derivatives. One of the isolated strains, Alcaligenes sp. 5-18, produced several compounds from oleic acid : 3-hydroxyoleic acid, 3-hydroxyhexadecenoic acid, octadecadienoic acid, hexadecadienoic acid, and tetradecadienoic acid. These compounds are intermediates in the beta-oxidation pathway of oleic acid, and their accumulation is probably due to defective beta-oxidation of oleic acid in the microorganism. Neither hydroxy nor enoic derivatives of fatty acids with a carbon chain length shorter than 14 were produced.