Hydroxy amino acids, constituents of chiral pharmaceutical intermediates or precursors, have a variety of unique functions in the research fields of biotechnology and molecular biology, i.e. antifungal, antibacterial, antiviral and anticancer properties. Biosynthesis of hydroxy amino acids is preferred because of its high specificity and selectivity. The hydroxylation of hydrophobic amino acids is catalyzed by hydroxylase, which belongs to the mononuclear non-heme Fe(Ⅱ)/α-ketoglutarate-dependent dioxygenases (Fe/αKGDs). Fe/αKGDs utilize an (Fe(Ⅳ)=O) intermediate to activate diverse oxidative transformations with key biological roles in the process of catalytic reaction. Here, we review the physiological properties and synthesis of hydroxy amino acids, especially for the 4-HIL and hydroxyproline. The catalytic mechanism of Fe/αKGDs is elucidated, and the applications of hydroxy amino acids in industrial engineering are also discussed.