Diosgenin is an important starting material in the steroidal hormone industry. Traditionally, diosgenin is mainly produced by acid hydrolysis of Dioscorea zingiberensis C. H. Wright (DZW) tubers. This method yields numerous byproducts that can cause serious pollution. In this study, diosgenin was obtained by biotransformation of steroidal saponins in DZW afforded by Trichoderma harzianum CGMCC 2979. The medium was optimized for maximum diosgenin production. The addition of phosphate buffer, surfactant Tween-85, and Fe(2+) increased the yield of diosgenin by 50.28%, 33.35%, and 22.07%, respectively. The optimum medium obtained by response surface methodology was composed of 60 mmol l(-1) phosphate buffer, 0.07% (w/v) Tween-85, and 0.93 mmol l(-1) Fe(2+). Under these conditions, a maximum diosgenin yield of 30.05 +/- 0.59 mg g(-1) was achieved, which was slightly higher than that obtained from traditional acid hydrolysis. By hydrolyzing the un-transformed steroidal saponins after biotransformation, the total diosgenin yield increased by 35% compared to traditional method. Moreover, chemical oxygen demand and residual reduced sugar in the wastewater produced by this integrated process were only 3.72% and 0.3%, respectively, that of the traditional acid hydrolysis method.