Diosgenin is an important precursor for synthesis of more than 200 steroidal hormone medicines. Rhizome of Dioscorea zingiberensis C. H. Wright (RDZ) contained the highest content of diosgenin in Dioscorea plant species. Diosgenin is traditionally extracted by acid hydrolysis from RDZ. However, the acid hydrolysis process produces massive wastewater which caused serious environment pollution. In this study, diosgenin extraction by direct biotransformation with Penicillium dioscin was investigated. The spawn cultivation conditions were optimized as: Czapeks liquid culture medium without sugar and agar (1,000 ml) + 6.0 g dioscin/6.0 g DL, 30 °C, 36 h; solid fermentation of RDZ: mycelia/RDZ of 0.05 g/kg, 30 °C, 50 h; the yield of diosgenin was over 90 %. Spawn cultivation was crucial for the direct biotransformation. In the spawn cultivation, amount and ratio of dioscin/DL were the key factors to promote biotransformation activity of P. dioscin. This biotransformation method was environment-friendly, simple and energy saving, and might be a potential substitute for acid hydrolysis in diosgenin extraction industry. [ABSTRACT FROM AUTHOR]