We performed an analysis to determine the importance of bile acid modification genes in the gut microbiome of inflammatory bowel disease and type 2 diabetic patients. We used publicly available metagenomic datasets from the Human Microbiome Project and the MetaHIT consortium, and determined the abundance of bile salt hydrolase gene (bsh), 7 alpha-dehydroxylase gene (adh) and 7-alpha hydroxysteroid dehydrogenase gene (hsdh) in fecal bacteria in diseased populations of Crohn's disease (CD), Ulcerative Colitis (UC) and Type 2 diabetes mellitus (T2DM). Phylum level abundance analysis showed a significant reduction in Firmicute-derived bsh in UC and T2DM patients but not in CD patients, relative to healthy controls. Reduction of adh and hsdh genes was also seen in UC and T2DM patients, while an increase was observed in the CD population as compared to healthy controls. A further analysis of the bsh genes showed significant differences in the correlations of certain Firmicutes families with disease or healthy populations. From this observation we proceeded to analyse BSH protein sequences and identified BSH proteins clusters representing the most abundant strains in our analysis of Firmicute bsh genes. The abundance of the bsh genes corresponding to one of these protein clusters was significantly reduced in all disease states relative to healthy controls. This cluster includes bsh genes derived from Lachospiraceae, Clostridiaceae, Erysipelotrichaceae and Ruminococcaceae families. This metagenomic analysis provides evidence of the importance of bile acid modifying enzymes in health and disease. It further highlights the importance of identifying gene and protein clusters, as the same gene may be associated with health or disease, depending on the strains expressing the enzyme, and differences in the enzymes themselves.