It has been known for a long time that hyperons produced in hadronic collisions are polarized perpendicular to the production plane of the reaction. This effect cannot be described by using twist-2 collinear parton correlators only. Here we compute the contribution of twist-3 fragmentation functions to the production of transversely polarized hyperons in unpolarized proton-proton collisions in the framework of collinear factorization. By taking into account the relations among the relevant twist-3 fragmentation functions which follow from the QCD equation of motion and the Lorentz invariance property of the correlators, we present the leading-order cross section for this term.