The functionalization of bio-based chemicals is essential to allow valorization of natural carbon sources. An atom-efficient biocatalytic oxidative cascade was developed for the conversion of saturated fatty acids to alpha-ketoacids. Employment of P450 monooxygenase in the peroxygenase mode for regioselective alpha-hydroxylation of fatty acids combined with enantioselective oxidation by alpha-hydroxyacid oxidase(s) resulted in internal recycling of the oxidant H2O2, thus minimizing degradation of ketoacid product and maximizing biocatalyst lifetime. The O2-dependent cascade relies on catalytic amounts of H2O2 and releases water as sole by-product. Octanoic acid was converted under mild conditions in aqueous buffer to 2-oxooctanoic acid in a simultaneous one-pot two-step cascade in up to >99% without accumulation of hydroxyacid intermediate. Scale-up allowed isolation of final product in 91% isolated yield and the cascade was applied to fatty acids of various chain lengths (C6:0-C10:0).