What is disclosed is a process for producing &egr;-caprolactone which comprises removing impurities by distillation from a reaction mixture obtained by co-oxidation of cyclohexanone and aldehyde, wherein &egr;-caprolactone separated from a purifying column is contacted with oxygen containing gas in the presence of cobalt. High boiling point components are removed to give an acid value of lower than 0.15 mgKOH/g. Thereby, a high quality &egr;-caprolactone providing improved polymer appearance is produced advantageously on an industrial scale without repeated purifying distillations or without using expensive stabilizer or adsorbent for the improvement of color.