The transformation of three monocyclic terpenes by three soil microorganisms have been studied. The organisms were isolated on, and grew rapidly in, mineral salts medium containing the appropriate terpene substrates as sole carbon sources. These organisms belong to the class Fungi Imperfecti, and two of them have been tentatively identified as Cladosporium species. A Cladosporium species designated T(1) was isolated from terpene-soaked soil, using 1-menthene as the sole source of carbon. The major catabolic product isolated from the growth medium of this organism was found to be a cyclic 1,2-diol identified as trans-p-methane-1,2-diol. A similar but biochemically distinct Cladosporium sp. designated T(7) was isolated on D-limonene. After growth, the medium of this organism contained 1.5 g/liter of the analogous product, trans-limonene-1,2-diol. Minor quantities of the corresponding cis-1,2-diol were also isolated. The third organism, designated as laboratory culture T(8), was isolated on 3-menthene and yielded a diol identified as trans-p-menthane-3,4-diol. From these results it is concluded that the formation of diols is a common intermediate in the fungal metabolism of monocyclic terpenes.