The catabolism of sterols in mycobacteria is highly important due to its close relevance in the pathogenesis of pathogenic strains and the biotechnological applications of nonpathogenic strains for steroid synthesis. However, some key metabolic steps remain unknown. In this study, the hsd4A gene from Mycobacterium neoaurum ATCC 25795 was investigated. The encoded protein, Hsd4A, was characterized as a dual-function enzyme, with both 17β-hydroxysteroid dehydrogenase and β-hydroxyacyl-CoA dehydrogenase activities in vitro. Using a kshAs-null strain of M. neoaurum ATCC 25795 (NwIB-XII) as a model, Hsd4A was further confirmed to exert dual-function in sterol catabolism in vivo. The deletion of hsd4A in NwIB-XII resulted in the production of 23,24-bisnorcholenic steroids (HBCs), indicating that hsd4A plays a key role in sterol side-chain degradation. Therefore, two competing pathways, the AD and HBC pathways, were proposed for the side-chain degradation. The proposed HBC pathway has great value in illustrating the production mechanism of HBCs in sterol catabolism and in developing HBCs producing strains for industrial application via metabolic engineering. Through the combined modification of hsd4A and other genes, three HBCs producing strains were constructed that resulted in promising productivities of 0.127, 0.109 and 0.074 g/l/h, respectively.