Cefdinir, a semi-synthetic third generation cephalosporin antibiotic being considered as an emerging pollutant, demands removal from aquatic ecosystems. A yeast strain isolated from pharmaceutical wastewater which was identified as Ustilago sp. SMN03 by molecular techniques and was found to be capable of utilizing cefdinir as a sole carbon source. The isolate was found to degrade 81 {\%} of cefdinir within 6 days under optimized conditions viz. pH 6.0, temperature 30 °C, a shaking speed of 120 rpm, an inoculum dosage of 4 {\%} (w/v) and an initial cefdinir concentration of 200 mg L{\textless}sup{\textgreater}−1{\textless}/sup{\textgreater}. Kinetic studies revealed that cefdinir degradation followed the pseudo-first order model, a rate constant of 0.222 per day and a half-life period of 3.26 days. Using LC–MS analysis, six novel intermediates formed during the cefdinir degradation were identified and characterized. FT-IR analysis showed that the functional groups ranging from 1,766 to 1,519 cm{\textless}sup{\textgreater}−1{\textless}/sup{\textgreater}, characteristic for lactam ring were completely removed during the cefdinir degradation. The opening of the $\beta$-lactam ring was one of the major steps in the cefdinir degradation process. Based on the results from the present study, a possible pathway of cefdinir degradation by Ustilago sp. SMN03 was proposed. To the best of our knowledge, this is the first report on microbial degradation of cefdinir by yeast.