The biotransformation of the sesquiterpene lactone tagitinin C by the fungus Aspergillus terreus MT 5.3 yielded a rare derivative that was elucidated by spectrometric methods. The fungus led to the formation of a different product through an unusual epoxidation reaction between C4 and C5, formation of a C3,C10 ether bridge, and a methoxylation of the C1 of tagitinin C. The chemical structure of the product, namely 1β-methoxy-3α-hydroxy-3,10β-4,5α-diepoxy-8β-isobutyroyloxygermacr-11(13)-en-6α,12-olide, is the same as that of a derivative that was recently isolated from the flowers of a Brazilian population of Mexican sunflower (Tithonia diversifolia), which is the source of the substrate tagitinin C. The in vitro cytotoxic activity of the substrate and the biotransformed product were evaluated in HL-60 cells using an MTT assay, and both compounds were found to be cytotoxic. We show that soil fungi may be useful in the biotransformation of sesquiterpene lactones, thereby leading to unusual changes in their chemical structures that may preserve or alter their biological activities, and may also mimic plant biosynthetic pathways for production of secondary metabolites.