Spores of Penicillium digitatum ATCC 201167 transform geraniol, nerol, citral, and geranic acid into methylheptenone. Spore extracts of P. digitatum convert geraniol and nerol NAD(+)-dependently into citral. Spore extract also converts citral NAD(+)-dependently into geranic acid. Furthermore, a novel enzymatic activity, citral lyase, which cofactor-independently converts citral into methylheptenone and acetaldehyde, was detected. These result show that spores of P. digitatum convert geraniol via a novel biotransformation pathway. This is the first time a biotransformation pathway in fungal spores has been substantiated by biochemical studies. Geraniol and nerol are converted into citral by citrol dehydrogenase activity. The citral formed is subsequently deacetylated by citral lyase activity, forming methylheptenone. Moreover, citral is converted reversibly into geranic acid by citral dehydrogenase activity.