Hypercholesterolemia is a major risk factor for cardiovascular diseases worldwide. Healthy intestinal microbiota can contribute to reducing the high cholesterol symptoms by producing bile salt hydrolase (BSH). In this study, recombinant BSH from the strain L. johnsonii 334 with high cholesterol reduction ability was selected to study the cholesterol-lowering mechanism mediated by farnesoid X receptor (FXR) regulation in mice. In the presence of recombinant BSH, mice had a larger bile acid pool. Analysis of individual bile acids revealed that bile acid composition was affected not only by recombinant BSH but also by the modulated gut microbiota. We confirmed a marked reduction in the transcription of FXR and its molecular targets in the ileum and a significant increase in the transcription of cholesterol 7a-hydroxylase (CYP7A1), which resulted in the increased bile acid synthesis and cholesterol-lowering effects. Notably, our work reveals the importance of BSH substrate specificity.