A series of unsaturated steroids has been incubated with fungi which are known to hydroxylate at a site corresponding to the allylic position in the analogous saturated steroids. In some cases, the anticipated hydroxylation occurred without rearrangement of the double bond. In a number of instances, however, products were obtained whose structures implied that allylic rearrangement had occurred during the reaction. The formation of these products is consistent with a stepwise mechanism of enzymatic oxidation. Possible routes for product formation are presented which incorporate this proposal.