Microbial biotransformation is a relevant strategy to obtain high added value natural compounds under controlled environmentally friendly conditions. In this research work, the use of agro-residues (orange peel oil) in the biotransformation of D-limonene by a native Penicillium italicumAUMC13045 species isolated from decayed orange was evaluated. The chemical analysis of water-steam distilled orange peel oil was determined by Gass Chromatography (GC) and D-limonene was shown to be the predominant constituent, representing 82.87% of the total content. It was investigated that the highest α-terpineol yield was obtained by Malt Yeast Broth (MYB) medium at the second day after the first addition of orange peel oil. The highest α-terpineol selectivity obtained when bioconversion media inoculated with fungal conidia at the early stage of the exponential growth. The investigated samples gave higher α-terpineol yield when extracted by mixture of (1:1) diethyl ether and pentane.