Bile acids are surface-active steroid compounds with a C5 carboxylic side chain at the steroid nucleus. They are produced by vertebrates, mainly functioning as emulsifiers for lipophilic nutrients, as signaling compounds, and as an antimicrobial barrier in the duodenum. Upon excretion into soil and water, bile acids serve as carbon- and energy-rich growth substrates for diverse heterotrophic bacteria. Metabolic pathways for the degradation of bile acids are predominantly studied in individual strains of the genera 'Pseudomonas', 'Comamonas', 'Sphingobium', 'Azoarcus', and 'Rhodococcus'. Bile acid degradation is initiated by oxidative reactions of the steroid skeleton at ring A and degradation of the carboxylic side chain before the steroid nucleus is broken down into central metabolic intermediates for biomass and energy production. This review summarizes the current biochemical and genetic knowledge on aerobic and anaerobic degradation of bile acids by soil and water bacteria. In addition, ecological and applied aspects are addressed, including resistance mechanisms against the toxic effects of bile acids.