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Biotransformation of antimalarial drug artemisinin by fungi Rhizopus stolonifer afforded three sesquiterpenoid derivatives. The transformed products were 1α-hydroxyartemisinin (3), 3.0%, a new compound, 10β-hydroxyartemisinin, 54.5% (4) and deoxyartemisinin (2) in 9% yield. The fungus expressed high-metabolism activity (66.5%). The chemical structures of the compounds were elucidated by 1D, 2D NMR spectrometry and mass spectral data. The major compound 10β-hydroxyartemisinin (4) was chemically converted to five new derivatives 5-9. All the compounds 3-9 were subjected for in vitro anti-malarial activity. 10β-Hydroxy-12β-arteether (8), IC50 at 18.29nM was found to be 10 times better active than its precursor 4 (184.56nM) and equipotent antimalarial with natural drug artemisinin whereas the α-derivative 9 is 3 times better than 4 under in vitro conditions. Therefore, the major biotransformation product 4 can be exploited for further modification into new clinically potent molecules. The results show the versatility of microbial-catalyzed biotransformations leading to the introduction of a hydroxyl group at tertiary position in artemisinin in derivative (3)., (Copyright © 2014 Elsevier Ltd. All rights reserved.)