To improve its bioavailability and pharmacological effects in humans, red ginseng was fermented with a newly isolated fungus, Monascus pilosus KMU103. Most of the ginsenosides were converted to deglycosylated ginsenocides, such as Rh(1), Rh(2), and Rg(3). The total amount of ginsenosides Rh(1), Rh(2), and Rg(3) was 838.7 mg/kg in the red ginseng, and increased to 4,117 mg/kg after 50 L fermentation in 13% red ginseng and 2% glucose. In addition, the Monascus-fermented red ginseng contained 3,089 mg/kg of monacolin K, one of the metabolites produced by Monascus known to reduce cholesterol in the blood. This newly developed Monascus-fermented red ginseng should result in improved health effects, not only by biotransforming gisenosides to deglycosylated ones but also by creating additional bioactive compounds.