Although oat (1,3:1,4)‐β‐glucan (BG) has been shown to decrease blood cholesterol in intervention trials, the detailed mechanism is not yet defined, but restricted reabsorption of bile acids (BAs) has been hypothesized. Using pigs as a model for humans we demonstrated that, compared to the control, BG added to the diet for 26 d caused decreases of 24% in blood total BAs (TBAs), 34% in total cholesterol (TC), and 57% in LDL cholesterol (LDL‐C) (P < 0.01); decreases of 20% TBAin the midjejunumand terminal ileum(P < 0.01); increases of 80%in cecal total neutral sterols (TNSs) including cholesterol (P < 0.01); a 50% reduction in BA active transport across ex vivo ileum after 40 min (P < 0.001); and 32%decrease in jejunal microvillus heights with apparent increased goblet cell activity. The results suggest that BG not only physically hinders the active reabsorption of BAs and uptake of cholesterol, but also changes the BAs profilewith lower circulating levels without excess excretion in the feces, thus resulting in reduced blood TC and LDL‐C. Fermentation of sterols reaching the colon enhanced production of therapeutic ursodeoxycholic acid, suppressed toxic lithocholic acid, and decreased the possibility of cholesterol absorption by transforming the latter into coprostanol, a nonabsorbableNS.—Gunness, P., Michiels, J., Vanhaecke, L., De Smet, S., Kravchuk, O., Van de Meene, A., Gidley, M. J. Reduction in circulating bile acid and restricted diffusion across the intestinal epithelium are associated with a decrease in blood cholesterol in the presence of oat β‐glucan. FASEB J. 30, 4227–4238 (2016). www.fasebj.org