Ornithine lipids (OLs) are widespread among Gram-negative bacteria. Their basic structure consists of a 3-hydroxy fatty acyl group attached in amide linkage to the α-amino group of ornithine and a second fatty acyl group ester-linked to the 3-hydroxy position of the first fatty acid. OLs can be hydroxylated within the secondary fatty acyl moiety and this modification has been related to increased stress tolerance. Rhizobium tropici, a nodule-forming α-proteobacterium known for its stress tolerance, forms four different OLs. Studies of the function of these OLs have been hampered due to lack of knowledge about their biosynthesis. Here we describe that OL biosynthesis increases under acid stress and that OLs are enriched in the outer membrane. Using a functional expression screen, the OL hydroxylase OlsE was identified, which in combination with the OL hydroxylase OlsC is responsible for the synthesis of modified OLs in R. tropici. Unlike described OL hydroxylations, the OlsE-catalysed hydroxylation occurs within the ornithine moiety. Mutants deficient in OlsE or OlsC and double mutants deficient in OlsC/OlsE were characterized. R. tropici mutants deficient in OlsC-mediated OL hydroxylation are more susceptible to acid and temperature stress. All three mutants lacking OL hydroxylases are affected during symbiosis. © 2011 Blackwell Publishing Ltd.