Lactic acid bacteria (LAB) were screened for ginsenoside transforming activity using crude ginseng extract. Thin-layer chromatography analysis of fermented ginseng extract showed that LAB strain MJM60396 possessed higher ginsenoside transformation ability than other strains. It converted major ginsenosides into minor ginsenosides such as Rg3 and Rh2. MJM60396 also showed high β-glucosidase activity. Strain MJM60396 was identified as Lactobacillus paracasei subsp. tolerans based on 16S rRNA gene sequence. To delineate the pathway involved in the production of the minor ginsenosides Rg3 and Rh2, strain MJM60396 was incubated with pure ginsenoside Rb1. HPLC analysis revealed the appearance of Rg3 and Rh2 peak from the incubation mixture containing Rb1 and strain MJM60396. Furthermore, β-glucosidase enzyme was prepared from strain MJM60396. To achieve its maximum activity, we optimized the pH and temperature conditions. Cell-free β-glucosidase enzyme hydrolyzed ginsenoside Rb1 through the following pathway: ginsenoside Rb1 → Rd → Rg3 → Rh2. This is the first report on the transformation of ginsenosides Rb1 to Rg3 and Rh2 by a Lac. paracasei subsp. tolerans strain. Our results indicate that Lac. paracasei subsp. tolerans MJM60396 has the potential to be used for preparing ginsenosides Rg3 and Rh2 as nutraceuticals.