Consider a scenario in which the data owner has some private or sensitive data and wants a data miner to access them for studying important patterns without revealing the sensitive information. Privacy-preserving data mining aims to solve this problem by randomly transforming the data prior to their release to the data miners. Previous works only considered the case of linear data perturbations - additive, multiplicative, or a combination of both - for studying the usefulness of the perturbed output. In this paper, we discuss nonlinear data distortion using potentially nonlinear random data transformation and show how it can be useful for privacy-preserving anomaly detection from sensitive data sets. We develop bounds on the expected accuracy of the nonlinear distortion and also quantify privacy by using standard definitions. The highlight of this approach is to allow a user to control the amount of privacy by varying the degree of nonlinearity. We show how our general transformation can be used for anomaly detection in practice for two specific problem instances: a linear model and a popular nonlinear model using the sigmoid function. We also analyze the proposed nonlinear transformation in full generality and then show that, for specific cases, it is distance preserving. A main contribution of this paper is the discussion between the invertibility of a transformation and privacy preservation and the application of these techniques to outlier detection. The experiments conducted on real-life data sets demonstrate the effectiveness of the approach.