Approximately 700 cultures of various types were examined for their ability to hydroxylate acetanilide. The major product formed by unidentified Streptomyces species RJTS-539 was identified as 4′-hydroxyacetanilide (N-acetyl-p-aminophenol). This culture gave a peak yield of 405 mg per liter from 1,000 mg of acetanilide per liter. Considerably lower yields of 4′-hydroxyacetanilide were isolated from S. cinnamoneus NRRLB-1285. The major conversion product of acetanilide formed by Amanita muscaria F-6 was identified as 2′-hydroxyacetanilide, with a peak yield of 433 mg per liter from 1,000 mg per liter of substrate. A small amount of 4′-hydroxyacetanilide was also formed. Six other Streptomyces cultures formed small amounts of one or two products identical or similar to 2′-hydroxyacetanilide or 4′-hydroxyacetanilide as determined by thin-layer chromatography and ultraviolet spectra.