Microbial modification of naturally occurring materials is one of the efficient ways to add new values to them. Hydroxylation of free unsaturated fatty acids by microorganism is a good example of those modifications. Among microbial strains studied for that purpose, a new bacterial isolate Pseudomonas aeruginosa PR3 has been well studied to produce several hydroxy fatty acids from different unsaturated fatty acids. Of those hydroxy fatty acids, 7,10-dihydroxy-8(E)-octadecenoic acid (DOD) was efficiently produced from oleic acid by strain PR3. However, it was highly plausible to use vegetable oil containing oleic acid rather than free oleic acid as a substrate for DOD production by strain PR3. In this study, we firstly tried to use olive oil containing high content of oleic acid as a substrate for DOD production. DOD production from olive oil was confirmed by structural determination with GC, TLC, and GC/MS analysis. DOD production yield from olive oil was 53.5%. Several important environmental factors were also tested. Galactose and glutamine were optimal carbon and nitrogen sources, and magnesium ion was critically required for DOD production from olive oil. Results from this study demonstrated that natural vegetable oils containing oleic acid could be used as efficient substrate for the production of DOD by strain PR3.