Fungal catalysis of sclareolide (1) using Mucor plumbeus (ATCC 4740), Cunninghamella blakesleeana (ATCC 9245), Cunninghamella echinulata (ATCC 9244), Curvularia lunata (ATCC 12017) and Aspergillus niger (ATCC 1004), was performed. Cunninghamella blakesleeana (ATCC 9245) metabolized compound 1 to afford O⁶-sclareolide (2), 3β,6α-dihydroxysclareolide (3), 9-hydroxysclareolide (4), along with three known metabolites, 1β,3β-dihydroxysclareolide (5), 3-oxosclareolide (6) and 3β-hydroxysclareolide (7). Biotransformation experiments of compound 1 with Cunninghamella echinulata (ATCC 9244) also yielded two new compounds, 5-hydroxysclareolide (8), and 7β-hydroxysclareolide (9) along with two known compounds 5 and 7. Spectroscopic methods were used to establish the structures of compounds 2—9. Compounds 2—9 exhibited modest acetylcholinesterase inhibitory activity.