The biotransformation of androsterone (1), epiandrosterone (2), androstanedione (3) and DHEA (dehydroepiandrosterone) (4) by Penicillium lanosocoeruleum-a fungal species not used in biotransformations so far-were described. All the substrates were converted in high yield (70%-99%) into D ring δ-lactones. The oxidation of 1 produced 3α-hydroxy-17a-oxa-D-homo-5α-androstan-17-one (5). The oxidation of 2 led to 3β-hydroxy-17a-oxa-D-homo-5α-androstan-17-one (6). The biotransformation of 3 resulted in the formation of 3α-hydroxy-17a-oxa-D-homo-5α-androstan-17-one (5) and 17a-oxa-D-homo-5α-androstan-3,17-dione (7). An analysis of the transformation progress of the studied substrates as a function of time indicates that the Baeyer-Villiger monooxygenase of this fungus does not accept the 3β-hydroxy-5-ene functionality of steroids. In this microorganism steroidal 3β-hydroxy-dehydrogenase (3β-HSD) was active, and as a result DHEA (4) was transformed exclusively to testololactone (8). Apart from the observed oxidative transformations, a reductive pathway was revealed with the C-3 ketone being reduced to a C-3α-alcohol. It is demonstrated for the first time that the reduction of the 3-keto group of the steroid nucleus can occur in the presence of a ring-D lactone functionality.