Bile salts are surface-active steroid compounds. Their main physiological function is aiding the digestion of lipophilic nutrients in intestinal tracts of vertebrates. Many bacteria are capable of transforming and degrading bile salts in the digestive tract and in the environment. Bacterial bile salt transformation and degradation is of high ecological relevance and also essential for the biotechnological production of steroid drugs. While biotechnological aspects have been reviewed many times, the physiological, biochemical and genetic aspects of bacterial bile salt transformation have been neglected. This review provides an overview of the reaction sequence of bile salt degradation and on the respective enzymes and genes exemplified with the degradation pathway of the bile salt cholate. The physiological adaptations for coping with the toxic effects of bile salts, recent biotechnological applications and ecological aspects of bacterial bile salt metabolism are also addressed. As the pathway for bile salt degradation merges with metabolic pathways for bacterial transformation of other steroids, such as testosterone and cholesterol, this review provides helpful background information for metabolic engineering of steroid-transforming bacteria in general.