Abstract: An improved process for the production of high yields of .delta.-lactones and 5-hydroxy fatty acids from unsaturated fatty acids which are free or esterified with glycerol is disclosed. The .delta.-lactones may be produced by reacting one or more .DELTA..sup.5 or .DELTA..sup.6 unsaturated fatty acids in the presence of an acid, clay or zeolite catalyst. Alternatively, the .delta.-lactones may be produced by reacting one or more triglycerides which are esters of glycerol with .DELTA..sup.5 or .DELTA..sup.6 unsaturated fatty acids with the same catalysts. Because the .delta.-lactones may be produced from the triglycerides of unsaturated fatty acids, the process may be practiced using naturally occurring plant oils directly, without the need for any preliminary steps of saponification. Optionally, the .delta.-lactones so formed may be further reacted with an alkali in an aqueous solution to produce 5-hydroxy fatty acids.