Hydroxy long-chain fatty acids occur widely in animals and plants and have important physiological activities in these eukaryotes. There are indications that these compounds are also common and important in fungi. The occurrence of hydroxy-polyunsaturated fatty acids (hydroxy-PUFAs) is of biotechnological importance, because these compounds are potentially high-value lipid products with medical applications. This review pays particular attention to the production of hydroxy-PUFAs by yeasts and other fungi. Hydroxy-PUFAs derived from lipoxygenase activity appear to be present in most fungi, while hydroxy-PUFAs from cyclooxygenase activity (i.e. prostaglandins) have mainly been implicated in the Oomycota and in yeasts from the genus Dipodascopsis. The occurrence of other hydroxy long-chain fatty acids in fungi is also discussed briefly; these include hydroxy fatty acids that are generally associated with cytochrome P-450 monooxygenase activity (i.e. terminal and sub-terminal hydroxy acids and diols derived from the corresponding epoxides) as well as 2-hydroxy-fatty acids and 3-hydroxy-fatty acids.