Provided is a process for industrially producing trans-4-hydroxy-L-proline, which is useful as a raw material for medicines or as an additive to foods. In the process, L-proline is converted into trans-4-hydroxy-L-proline in the presence of an enzyme source which is derived from a microorganism belonging to the genus Dactylosporangium or Amycolatopsis and which catalyzes the hydroxylation of L-proline into trans-4-hydroxy-L-proline, a divalent iron ion and 2-ketoglutaric acid, in an aqueous medium, and the produced trans-4-hydroxy-L-proline is collected from the aqueous medium. Also provided is a novel enzyme L-proline-4-hydroxylase, which is useful for the process.