Bile acids (BAs) are water-soluble end products from cholesterol metabolism and are essential for efficient absorption of dietary lipids. By using targeted somatic mutagenesis of the nuclear receptor liver receptor homolog 1 (LRH-1) in mouse hepatocytes, we demonstrate here that LRH-1 critically regulates the physicochemical properties of BAs. The absence of LRH-1 and subsequent deficiency of Cyp8b1 eliminate the production of cholic acid and its amino acid conjugate taurocholic acid and increase the relative amounts of less amphipathic BA species. Intriguingly, while the expression of Cyp8b1 is almost extinguished in the livers of mice that lack LRH-1, the expression of the rate-limiting enzyme of BA synthesis, i.e., Cyp7a1, remains unchanged. The profound remodeling of the BA composition significantly reduces the efficacy of intestinal absorption of lipids and reuptake of BAs and facilitates the removal of lipids from the body. Our studies unequivocally demonstrate a pivotal role for LRH-1 in determining the composition of BAs, which, in turn has major consequences on whole-body lipid homeostasis.