Stable mutants showing improved 11-hydroxylation of Substance S were isolated, following treatment with N-methyl-N'-nitro-N-nitrosoguanidine (NTG) and regeneration of uninucleate protoplasts of the appropriate fungal strains. This procedure was especially suitable for obtaining more directed 11 beta-hydroxylation of Substance S with Curvularia lunata IM 2901. Apart from producing cortisol (11 beta-hydroxy-S), the parent strain formed several by-products that significantly lowered the yield of the desired 11 beta-hydroxyderivative. Isolated mutants of this microorganism carried out directed 11 beta-hydroxylation with only a small amount of one of the by-products, which resulted in a much higher yield of cortisol.