The mechanisms by which early microbial colonizers of the neonate influence gut development are poorly understood. Bacterial bile salt hydrolase (BSH) acts as a putative colonization factor that influences bile acid signatures and microbe-host signaling pathways and we considered whether this activity can influence infant gut development. In silico analysis of the human neonatal gut metagenome confirmed that BSH enzyme sequences are present as early as one day postpartum. Gastrointestinal delivery of cloned BSH to immature gnotobiotic mice accelerated shortening of the colon and regularized gene expression profiles, with monocolonised mice more closely resembling conventionally raised animals. In situ expression of BSH decreased markers of cell proliferation (Ki67, Hes2 and Ascl2) and strongly increased expression of ALPI, a marker of cell differentiation and barrier function. These data suggest an evolutionary paradigm whereby microbial BSH activity potentially influences bacterial colonization and in-turn benefits host gastrointestinal maturation.