Gallic acid (3,4,5-trihydroxybenzoic acid) was produced by microbial biotransformation of coffee pulp tannins by Penicillium verrucosum. Gallic acid production was optimized using response surface methodology (RSM) based on central composite rotatable design. Process parameters such as pH, moisture, and fermentation period were considered for optimization. Among the various fungi isolated from coffee by-products, Penicillium verrucosum produced 35.23 µg/g of gallic acid on coffee pulp as sole carbon source in solid-state fermentation. The optimum values of the parameters obtained from the RSM were pH 3.32, moisture 58.40%, and fermentation period of 96 hr. Gallic acid production with an increase of 4.6-fold was achieved upon optimization of the process parameters. The results optimized could be translated to 1-kg tray fermentation. High-performance liquid chromatography (HPLC) analysis and spectral studies such as mass spectroscopy (MS) and (1)H-nuclear magnetic resonance (NMR) confirmed that the bioactive compound isolated was gallic acid. Thus, coffee pulp, which is available in enormous quantity, could be used for the production of value-added products that can find avenues in food, pharmaceutical, and chemical industries.