Bile acids are synthesized from cholesterol in the liver and further metabolized by the gut microbiota into secondary bile acids. Bile acid synthesis is under negative feedback control through activation of the nuclear receptor farnesoid X receptor (FXR) in the ileum and liver. Here we profiled the bile acid composition throughout the enterohepatic system in germ-free (GF) and conventionally raised (CONV-R) mice. We confirmed a dramatic reduction in muricholic acid, but not cholic acid, levels in CONV-R mice. Rederivation of Fxr-deficient mice as GF demonstrated that the gut microbiota regulated expression of fibroblast growth factor 15 in the ileum and cholesterol 7α-hydroxylase (CYP7A1) in the liver by FXR-dependent mechanisms. Importantly, we identified tauro-conjugated beta- and alpha-muricholic acids as FXR antagonists. These studies suggest that the gut microbiota not only regulates secondary bile acid metabolism but also inhibits bile acid synthesis in the liver by alleviating FXR inhibition in the ileum. ► The gut microbiota reduces bile acid pool size and composition ► The gut microbiota activates FXR by alleviating receptor antagonism ► Tauro-conjugated muricholic acids are naturally occurring FXR antagonists