The contribution of the gut microbiota to the metabolism of cholesterol is not well understood. In this study, we identify 21 fosmid clones from a human gut microbiome metagenomic library that, when expressed in Escherichia coli, produce halos on LB agar supplemented with 0.01% (w/v) cholesterol (LBC agar). Analysis of 14 of these clones revealed that they all share a fragment of DNA with homology to the genome of Bacteroides vulgatus. The gene responsible for halo production on LBC agar, named choA, was identified as an N-acyltransferase known to produce an acylated glycine molecule called commendamide. In this study we show that commendamide is capable of producing a halo on LBC agar suggesting that this molecule is solubilizing the cholesterol micelles in LBC agar. We also show that commendamide is responsible for the previously described hemolytic activity associated with the choA orthologue in Bacteroides fragilis. A functional analysis of ChoA identified 2 amino acids that are important for commendamide biosynthesis and we present phylogenetic and functional data showing that orthologues of choA are found only in the order Bacteroidales. Therefore, the production of commendamide may be an adaptation to the environments colonized by the Bacteroidales, including the mammalian gut.