Intestinal health relies on the immunosuppressive activity of CD4+ regulatory T (Treg) cells1. Expression of the transcription factor Foxp3 defines this lineage, and can be induced extrathymically by dietary or commensal-derived antigens in a process assisted by a Foxp3 enhancer known as conserved non-coding sequence 1 (CNS1)2-4. Products of microbial fermentation including butyrate facilitate the generation of peripherally induced Treg (pTreg) cells5-7, indicating that metabolites shape the composition of the colonic immune cell population. In addition to dietary components, bacteria modify host-derived molecules, generating a number of biologically active substances. This is epitomized by the bacterial transformation of bile acids, which creates a complex pool of steroids8 with a range of physiological functions9. Here we screened the major species of deconjugated bile acids for their ability to potentiate the differentiation of pTreg cells. We found that the secondary bile acid 3β-hydroxydeoxycholic acid (isoDCA) increased Foxp3 induction by acting on dendritic cells (DCs) to diminish their immunostimulatory properties. Ablating one receptor, the farnesoid X receptor, in DCs enhanced the generation of Treg cells and imposed a transcriptional profile similar to that induced by isoDCA, suggesting an interaction between this bile acid and nuclear receptor. To investigate isoDCA in vivo, we took a synthetic biology approach and designed minimal microbial consortia containing engineered Bacteroides strains. IsoDCA-producing consortia increased the number of colonic RORγt-expressing Treg cells in a CNS1-dependent manner, suggesting enhanced extrathymic differentiation.