We report the metal‐catalyzed α‐hydroxylation of a variety of cyclic and acyclic β‐dicarbonyl compounds by molecular oxygen. The decisive advantage of this new method is the use of catalytic amounts of the nontoxic cerium salt CeCl3·7H2O in 2‐propanol at ambient temperature. Most of the cyclic substrates 4a−4i give high yields of analytically pure products 5a−5i, and the workup procedure is simple filtration through silica gel. The oxidation of acyclic dicarbonyl compounds 4j−4p, however, is accompanied by side reactions and decomposition, reducing the yields of products 5j−5p significantly. A proposed mechanism is in agreement with experimental results, in particular the observed oxygen uptake. (© Wiley‐VCH Verlag GmbH & Co. KGaA, 69451 Weinheim, Germany, 2003)