Skeletal isomerization of ergosterol peroxide, a primary oxidation product of ergosterol, was investigated under thermal and iron(II)-mediated conditions. Thermal isomerization resulted in not only the isolation of the predicted 7-hydroxy-5,6-epoxides but also the discovery of the unprecedented 7/9/5-ring-fused ergostane for the first time. The iron(II)-mediated isomerization proceeded at ambient temperature, resulting in the formation of the expected 5,6-epoxysterols and a ring-opened bicyclic diketone. The diketone was further converted into novel ergostane under thermal conditions and into (+)-sarocladione under acidic conditions. All transformations from ergosterol to sarocladione, including the isolation of the unstable diketone intermediate, were achieved at ambient temperature, confirming the biosynthetic pathway of sarocladione. Several mushroom ingredients with a 5,6-epoxy group were synthesized stereoselectively from the isomerization products, leading to the confirmation or revision of the structures of natural products. The β-amyloid aggregation inhibitory activity of synthetic sterols was evaluated for the first time to gain insights into the potential for dementia prevention. This study is valuable both for supplying rare sterols found in mushrooms for biological studies and for shedding light on the oxidative metabolic pathways of ergosterol.