Hydroxy fatty acids (HFAs) are highly valued industrial materials. Pseudomonas sp. NRRL B-2994 was used for stereospecific microbial biotransformation to hydroxylate unsaturated fatty acids (UFAs). As Pseudomonas sp. was continuously subcultured, the hydroxylation capability (both conversion rate and productivity) decreased. A morphology change was observed from large to small colonies. To produce stereospecific 10-hydroxy-12(Z)-octadecenoic acid from plant oils by using Pseudomonas sp. NRRL B-2994, the effect of phenotypic variations related to microbial hydroxylation of UFAs was confirmed. The conversion rate and the total productivity of creating HFAs from UFAs by microbial hydroxylation were highly dependent upon colony phenotype variations of Pseudomonas sp. NRRL B-2994. The morphological change was responsible for a lower rate of hydroxylation. The small colony variants showed increased hydrophobicity of the cell surface resulting in cell aggregation in liquid culture and lower hydroxylation due to limited exposure of substrates, UFAs. Small colony variants could be reverted to typical large colony variants. An economically feasible process was established for microbial hydroxylation using large colony variants with 50% HFA conversion rate and 10-15 g/L of productivity. (C) 2019, The Society for Biotechnology, Japan. All rights reserved.