Listeria monocytogenes is a bacterial pathogen causing severe food-borne infections in humans and animals. It can sense and adapt to a variety of harsh microenvironments outside as well as inside the host. Once ingested by a mammalian host, the bacterial pathogen reaches the intestinal lumen, where it encounters bile salts which, in addition to their role in digestion, have antimicrobial activity. Comparison of the L. monocytogenes and Listeria innocua genomes has revealed the presence of an L. monocytogenes-specific putative gene encoding a bile salt hydrolase (BSH). Here, we show that the bsh gene encodes a functional intracellular enzyme in all pathogenic Listeria species. The bsh gene is positively regulated by PrfA, the transcriptional activator of known L. monocytogenes virulence genes. Moreover, BSH activity increases at low oxygen concentration. Deletion of bsh results in decreased resistance to bile in vitro, reduced bacterial faecal carriage after oral infection of the guinea-pigs, reduced virulence and liver colonization after intravenous inoculation of mice. Taken together, these results demonstrate that BSH is a novel PrfA-regulated L. monocytogenes virulence factor involved in the intestinal and hepatic phases of listeriosis.