Submerged cultures of the ascomycete Chaetomium globosum oxidised the exogenous sesquiterpene (+)-valencene to nootkatone via the stereoselective generation of alpha-nootkatol. Inhibition experiments suggested that the first introduction of oxygen, the rate-limiting step of the bioconversion, may have been catalysed by a cytochrome-P450-monooxygenase. However, nootkatone was not the final metabolite: further flavour-active and inactive, non-volatile oxidation products were identified. (+)-Valencene and the flavour-active mono-oxyfunctionalised transformation products, alpha-nootkatol, nootkatone, and valencene-11,12-epoxide accumulated preferably inside the fungal cells. Di- and poly-oxygenated products, such as nootkatone-11,12-epoxide, were found solely in the culture medium, indicating an active transport of these metabolites into the extracellular compartment during (+)-valencene detoxification. These metabolic properties may have contributed to the high tolerance of the fungus towards the exogenous hydrocarbon.