To study the effect of elevated oxygen concentrations on β-oxidation for the production of lactones by Yarrowia lipolytica W29 in solid state fermentation (SSF), experiments using oxygenenriched air, with different initial concentrations of oxygen ratio, were carried out. Growth kinetics using an oxygen ratio of 30% reached the stationary phase earlier than other conditions used. In addition, the production of γ-decalactone and 3-hydroxy-γ-decalactone reached the maximal concentrations of 270 mg L −1 and 1190 mg L −1 , respectively. Using higher initial oxygen ratios (40% and 50%), an incomplete growth inhibition occurred and resulted in a higher concentration of yeast at the stationary phase and a slightly higher 3-hydroxy-γ-decalactone accumulation. When oxygenenriched air (oxygen ratio of 30%) was injected twice (at 0 and 20 h), 3-hydroxy-γ-decalactone reached a higher concentration (1620 mg L −1) and it reached a very high concentration of 4600 mg L −1 in the condition of oxygen-enriched air injected many times (at 0, 20, 35, 48 and 60 h). This study suggested that oxygen is required for the production of 3-hydroxy-γ-decalactone in SSF. Oxygen may be consumed preferentially for long-chain fatty acid oxidations rather than at C10-level. Furthermore, the production of γ-decalactone may be improved by optimizing the growth conditions to reach a very high specific growth rate. A low oxygen availability in the system at the stationary growth phase led to an inhibition of γ-decalactone degradation. From the present work, an alternative system is proposed as a novel model to study the effect of elevated oxygen concentration in SSF.