(−)-α-Bisabolol, a bioactive monocyclic sesquiterpene alcohol, has been used in pharmaceutical and cosmetic products with anti-inflammatory, antibacterial and skin-caring properties. However, the poor water solubility of (−)-α-bisabolol limits its pharmaceutical applications. It has been recognized that microbial transformation is a very useful approach to generate more polar metabolites. Fifteen microorganisms were screened for their ability to metabolize (−)-α-bisabolol in order to obtain its more polar derivatives, and the filamentous fungus Absidia coerulea was selected for scale-up fermentation. Seven new and four known metabolites were obtained from biotransformation of (−)-α-bisabolol (1), and all the metabolites exhibited higher aqueous solubility than that of the parent compound 1. The structures of newly formed metabolites were established as (1R,5R,7S)- and (1R,5S,7S)-5-hydroxy-α-bisabolol (2 and 3), (1R,5R,7S,10S)-5-hydroxybisabolol oxide B (4), (1R,7S,10S)-1-hydroxybisabolol oxide B (5), 12-hydroxy-α-bisabolol (7), (1S,3R,4S,7S)- and (1S,3S,4S,7S)-3,4-dihydroxy-α-bisabolol (8 and 10) on the basis of spectroscopic analyses. These compounds could also be used as reference standards for the detection and identification of the metabolic products of 1 in the mammalian system.