A process for producing α- and φ-hydroxy fatty acids by treating lanolin fatty acids with boric acid to esterify hydroxy fatty acids contained therein, distilling the reaction product in a vacuum to separate and purify the borates of the hydroxy fatty acids and non-hydroxy fatty acids, hydrolyzing the purified borates, and distilling the hydrolyzate; each of the lanolin fatty acids and esters thereof thus obtained; and cosmetics and external preparations prepared therefrom. The invention process provides light-colored, nearly odorless lanolin fatty acids readily and efficiently on an industrial scale, and the obtained acids can be utilized in the fields of medicines and cosmetics.