The composite human microbiome of Western populations has probably changed over the past century, brought on by new environmental triggers that often have a negative impact on human health. Here we show that consumption of a diet high in saturated (milk-derived) fat, but not polyunsaturated (safflower oil) fat, changes the conditions for microbial assemblage and promotes the expansion of a low-abundance, sulphite-reducing pathobiont, Bilophila wadsworthia. This was associated with a pro-inflammatory T helper type 1 (T(H)1) immune response and increased incidence of colitis in genetically susceptible Il10(−/−), but not wild-type mice. These effects are mediated by milk-derived-fat-promoted taurine conjugation of hepatic bile acids, which increases the availability of organic sulphur used by sulphite-reducing microorganisms like B. wadsworthia. When mice were fed a low-fat diet supplemented with taurocholic acid, but not with glycocholic acid, for example, a bloom of B. wadsworthia and development of colitis were observed in Il10(−/−) mice. Together these data show that dietary fats, by promoting changes in host bile acid composition, can markedly alter conditions for gut microbial assemblage, resulting in dysbiosis that can perturb immune homeostasis. The data provide a plausible mechanistic basis by which Western-type diets high in certain saturated fats might increase the prevalence of complex immune-mediated diseases like inflammatory bowel disease in genetically susceptible hosts.