Geraniol (1) is the biogenetic precursor of a number of monoterpenes. We tested various marine-derived microorganisms to determine their ability to biotransform 1. Only Hypocrea sp. was capable of transforming 1 into its oxidized derivative, 1,7-dihydroxy-3,7-dimethyl-(E)-oct-2-ene (2). The structure of the metabolite obtained was assigned on the basis of detailed spectroscopic data analyses.