Diosgenin (DSG) is a phytosterol saponin mainly found in Dioscorea zingiberensis C.H. Wright. It has shown promising results in treating various diseases such as cancer, diabetes, arthritis, asthma, and cardiovascular diseases. Diosgenin is also an important medicinal chemical for synthesizing various steroid medicines. The production of diosgenin by acid hydrolysis generates a large amount of wastewater, leading to severe environmental pollution. However, producing diosgenin through microbial fermentation can effectively reduce environmental pollution. Numerous studies have demonstrated that various microorganisms can produce diosgenin via solid-state fermentation. Nevertheless, due to the complexity, high maintenance costs, uneven heat production, and other characteristics of solid-state fermentation, it is not commonly used in the industrial production of diosgenin. In contrast, liquid fermentation offers advantages such as simple operation, easy maintenance, and stable fermentation, making it more suitable for the industrial production of diosgenin. However, few studies have focused on producing diosgenin using liquid fermentation. In this study, endophytic Bacillus licheniformis SYt1 was used to produce diosgenin via liquid fermentation, with Dioscorea tuber powder as a substrate. Soxhlet extraction and silica gel column chromatography were employed to identify the diosgenin from the liquid fermentation products. Suitable fermentation conditions were screened and identified. The environmental variables that significantly affect the diosgenin yield were determined by the Plackett–Burman design (P-BD) with eight factors. The three factors (peptone, yeast extract powder and inorganic salt) with the greatest influence on the diosgenin yield were selected and further optimized using a response surface methodology (RSM). The final culture conditions were determined to be 35.79 g/L of peptone, 14.56 g/L of yeast extract powder, and 1.44 g/L of inorganic salt. The yield of diosgenin under these conditions was 132.57 mg/L, which was 1.8 times greater than the yield under pre-optimization conditions. This effective, clean, and promising liquid fermentation method possesses the potential to replace the traditional acid hydrolysis method for the industrial production of diosgenin.