Microbacterium esteraromaticum was isolated from ginseng field. The β-glucosidase gene (bgp1) from M. esteraromaticum was cloned and expressed in Escherichia coli BL21 (DE3). The bgp1 gene consists of 2,496 bp encoding 831 amino acids which have homology to the glycosyl hydrolase family 3 protein domain. The recombinant β-glucosidase enzyme (Bgp1) was purified and characterized. The molecular mass of purified Bgp1 was 87.5 kDa, as determined by SDS-PAGE. Using 0.1 mg ml(-1) enzyme in 20 mM sodium phosphate buffer at 37°C and pH 7.0, 1.0 mg ml(-1) ginsenoside Rb1 was transformed into 0.444 mg ml(-1) ginsenoside Rg3 within 6 h. The Bgp1 sequentially hydrolyzed the outer and inner glucose attached to the C-20 position of ginsenosides Rb1. Bgp1 hydrolyzed the ginsenoside Rb1 along the following pathway: Rb1 → Rd → 20(S)-Rg3. This is the first report of the biotransformation of ginsenoside Rb1 to ginsenoside 20(S)-Rg3 using the recombinant β-glucosidase.