The γ-decalactone is one of the lactones with peachy aroma which has been approved as food additive by FDA. The aim of this study was to optimize media composition and conditions for microbial biotransformation of ricinoleic acid and castor oil as substrates to γ-decalactone using the yeast Yarrowia lipolytica. The Y. lipolytica DSM 3286 strain was used as biotransformation agent in different trails designed by Taguchi method. The highest concentration of γ-decalactone was 62.4 and 52.9 mg/L from 1.5% ricinoleic acid and 2.5% castor oil, respectively. Nitrogen sources exhibited significant effect on the biotransformation. The maximum γ-decalactone production occurred at pH 6. The results showed that the composition of biotransformation medium composition is important for γ-decalactone production.