In this study, the major ginsenoside Rb1 was transformed into the more pharmacologically active minor compound K by food grade Lactobacillus paralimentarius LH4, which was isolated from kimchi, a traditional Korean fermented food. The enzymatic reaction was analyzed by TLC, HPLC, and NMR. Using the cell-free enzyme of Lactobacillus paralimentarius LH4 at optimal conditions for 30 °C at pH 6.0, 1.0 mg ml(-1) ginsenoside Rb1 was transformed into 0.52 mg ml(-1) compound K within 72 h, with a corresponding molar conversion yield of 88 %. The cell-free enzyme hydrolyzed the two glucose moieties attached to the C-3 position and the outer glucose moiety attached to the C-20 position of the ginsenoside Rb1. The cell-free enzyme hydrolyzed the ginsenoside Rb1 along the following pathway: ginsenoside Rb1 → gypenoside XVII and ginsenoside Rd → ginsenoside F2 → compound K. Our results indicate that Lactobacillus paralimentarius LH4 has the potential to be applied for the preparation of compound K in the food industry.