Abstract Under the deacetylation of fungal endophyte Penicillium canescens , which was isolated from pigeon pea, a novel and highly efficient biotransformation method of astragalosides to astragaloside IV in Radix Astragali was investigated. After single factor tests of the biotransformation procedure, the optimum biotransformation conditions were confirmed as the liquid solid ratio 20:1, the biotransformation temperature 30 °C, time 36 h and pH 7, respectively. Final content of astragaloside IV in Radix Astragali reached 7.66 ± 0.44 mg/g, which was 5.51-fold to that of untreated one and contents of astragaloside I and astragaloside II significantly decreased. The immobilized Ca-alginate gel beads with P. canescens could be reused at least for 13 runs. This is the first report that fungal endophyte was applied for the biotransformation of astragalosides to astragaloside IV in Radix Astragali and this novel high-efficiency biotransformation method will be an alternative to enhance the content of astragaloside IV in Radix Astragali in commercial process.