Bile acids (BAs) are steroid detergents in bile that contribute to the absorption of fats and fat-soluble vitamins while shaping the gut microbiome because of their antimicrobial properties1-4. Here we identify the enzyme responsible for a mechanism of BA metabolism by the gut microbiota involving amino acid conjugation to the acyl-site of BAs, thus producing a diverse suite of microbially conjugated bile acids (MCBAs). We show that this transformation is mediated by acyltransferase activity of bile salt hydrolase (bile salt hydrolase/transferase,BSH/T). Clostridium perfringens BSH/T rapidly performed acyl transfer when provided various amino acids and taurocholate, glycocholate or cholate, with an optimum at pH 5.3. Amino acid conjugation by C. perfringens BSH/T was diverse, including all proteinaceous amino acids except proline and aspartate. MCBA production was widespread among gut bacteria, with strain-specific amino acid use. Species with similar BSH/T amino acid sequences had similar conjugation profiles and several bsh/t alleles correlated with increased conjugation diversity. Tertiary structure mapping of BSH/T followed by mutagenesis experiments showed that active site structure affects amino acid selectivity. These MCBA products had antimicrobial properties, where greater amino acid hydrophobicity showed greater antimicrobial activity. Inhibitory concentrations of MCBAs reached those measured natively in the mammalian gut. MCBAs fed to mice entered enterohepatic circulation, in which liver and gallbladder concentrations varied depending on the conjugated amino acid. Quantifying MCBAs in human faecal samples showed that they reach concentrations equal to or greater than secondary and primary BAs and were reduced after bariatric surgery, thus supporting MCBAs as a significant component of the BA pool that can be altered by changes in gastrointestinal physiology. In conclusion, the inherent acyltransferase activity of BSH/T greatly diversifies BA chemistry, creating a set of previously underappreciated metabolites with the potential to affect the microbiome and human health.