A fungal lactonohydrolase catalyzes the stereospecific hydrolysis of the intramolecular ester bond of D-pantoyl lactone and is useful for optical resolution of racemic pantoyl lactone. High activity of this stereospecific hydrolysis reaction was found in several filamentous fungi belonging to the genera Fusarium, Gibberella and Cylindrocarpon through the screening in a variety of microorganisms. Fusarium oxysporum AKU 3702 showed high productivity of the enzyme and the cells containing the enzyme could be used repeatedly for this hydrolysis reaction. On incubation with the mycelia of this fungus, which had been cultivated in 3% glycerol, 0.5% Polypepton, 0.5% yeast extract and 0.5% corn steep liquor, pH 6.0, 46.0% of the racemic pantoyl lactone (700 mg/ml) was hydrolyzed and the optical purity of the pantoic acid formed was 96% enantiomeric excess for the D-isomer.