The hydroxylation of fatty acids is an appealing reaction in synthetic chemistry, although the lack of selective catalysts hampers its industrial implementation. In this study, we have engineered a highly regioselective fungal peroxygenase for the ω-1 hydroxylation of fatty acids with quenched stepwise over-oxidation. One single mutation near the Phe catalytic tripod narrowed the heme cavity, promoting a dramatic shift toward subterminal hydroxylation with a drop in the over-oxidation activity. While crystallographic soaking experiments and molecular dynamic simulations shed light on this unique oxidation pattern, the selective biocatalyst was produced by Pichia pastoris at 0.4 g L⁻¹ in a fed-batch bioreactor and used in the preparative synthesis of 1.4 g of (ω-1)-hydroxytetradecanoic acid with 95 % regioselectivity and 83 % ee for the S enantiomer.