Aims: Development and optimization of an efficient and inexpensive biotransformation process for ginsenoside compound K production by Paecilomyces bainier sp. 229. Methods and Results: We have determined the optimum culture conditions required for the efficient production of ginsenoside compound K by P. bainier sp. 229 via biotransformation of ginseng saponin substrate. The optimal medium constituents were determined to be: 30 g sucrose, 30 g soybean steep powder, 1 g wheat bran powder, 1 g (NH4)(2)SO4, 2 g MgSO4.7H(2)O and 1 g CaCl2 in 1 l of distilled water. An inoculum size of 5-7.5% with an optimal pH range of 4.5-5.5 was essential for high yield. Conclusions: The Mol conversion quotient of ginseng saponins increased from 21.2% to 72.7% by optimization of the cultural conditions. Scale-up in a 10 l fermentor, under conditions of controlled pH and continuous air supply in the optimal medium, resulted in an 82.6% yield of ginsenoside compound K. Significant and Impact of the Study: This is the first report on the optimization of culture conditions for the production of ginsenoside compound K by fungal biotransformation. The degree of conversion is significantly higher than previous reports. Our method describes an inexpensive, rapid and efficient biotransformation system for the production of ginsenoside compound K.