A bacterium Streptomyces virginiae IBL-14 capable of effective degradation of diosgenin was isolated from activated sludge for treatment of waste from a steroidal drug factory. From the culture broth of diosgenin degradation, 11 compounds were purified and then identified, eight of which were previously unidentified compounds including 1-dehydroisonuatigenone [VI], nuatigenone [VIII], 1-dehydronuatigenone [X], 26-acetyl-nuatigenone [XII], 6-methoxy-6-dehydrodiosgenone [XIII], 6-methoxy-6-dehydroisonuatigenone [XIV], 6-methoxy-6-dehydronuatigenone [XV], and 6-dimethoxy-7alpha-hydroxyldiosgenone [XVI]. Additionally, two important microbial transformations of diosgenin (6-methoxylation and C25-tertiary carbon hydroxylation) were found. Two valuable chemical reactions of the steroids (structural rearrangement and esterification)were also confirmed. As a result, a new metabolic pathway of diosgenin metabolism was postulated.