Biotransformation of sesquiterpenoids isolated from several liverworts using various fungi and mammals is summarized. Microorganisms introduce an oxygen atom at an allylic position to give secondary hydroxyl and keto groups. The cyclopentane ring is also oxidized to afford monoketo, and mono- and diols. Double bonds are also either reduced or oxidized to give either saturated compounds or epoxides, followed by hydrolysis to afford diols. The methyl group is oxidized to give a primary alcohol. Some fungi cleave the cyclopropane ring to form a 1,1-dimethyl group. These reactions precede stereo- and regiospecifically. Cytochrome P-450 is responsible for the introduction of an oxygen function into the substrates. The present methods are cheap, one step reactions, non-hazardous, and very useful for the production of some bioactive compounds from a large number of terpenoids found in liverworts and higher plants.