The oxidized bile acid 7-oxoLCA (7-oxolithocholic acid), formed primarily by gut micro-organisms, is reduced in human liver to CDCA (chenodeoxycholic acid) and, to a lesser extent, UDCA (ursodeoxycholic acid). The enzyme(s) responsible remained unknown. Using human liver microsomes, we observed enhanced 7-oxoLCA reduction in the presence of detergent. The reaction was dependent on NADPH and stimulated by glucose 6-phosphate, suggesting localization of the enzyme in the ER (endoplasmic reticulum) and dependence on NADPH-generating H6PDH (hexose-6-phosphate dehydrogenase). Using recombinant human 11β-HSD1 (11β-hydroxysteroid dehydrogenase 1), we demonstrate efficient conversion of 7-oxoLCA into CDCA and, to a lesser extent, UDCA. Unlike the reversible metabolism of glucocorticoids, 11β-HSD1 mediated solely 7-oxo reduction of 7-oxoLCA and its taurine and glycine conjugates. Furthermore, we investigated the interference of bile acids with 11β-HSD1-dependent interconversion of glucocorticoids. 7-OxoLCA and its conjugates preferentially inhibited cortisone reduction, and CDCA and its conjugates inhibited cortisol oxidation. Three-dimensional modelling provided an explanation for the binding mode and selectivity of the bile acids studied. The results reveal that 11β-HSD1 is responsible for 7-oxoLCA reduction in humans, providing a further link between hepatic glucocorticoid activation and bile acid metabolism. These findings also suggest the need for animal and clinical studies to explore whether inhibition of 11β-HSD1 to reduce cortisol levels would also lead to an accumulation of 7-oxoLCA, thereby potentially affecting bile acid-mediated functions.