Emerging scientific evidence suggests that the supplementation of probiotics may help to reduce/manage blood cholesterol levels in humans. We evaluated the in vitro cholesterol‐lowering activity of the probiotic strain Bacillus coagulansMTCC 5856. This probiotic de‐conjugated bile salts and liberated deoxycholic acid, confirming its bile salt hydrolase activity. Furthermore, B. coagulansMTCC 5856 also significantly (P < 0.05) reduced cholesterol levels in culture media under growing (48.42%), resting (live but suspended in buffer, 36.47%) and even heat‐killed (dead, 8.5%) conditions. Bacillus coagulansMTCC 5856 significantly reduced the cholesterol levels in cholesterol‐rich foods, such as egg yolk (39.79%), chicken liver (45.44%) and butter (49.51%), when incubated for 24 h in conditions mimicking the in vivo environment. Bacillus coagulansMTCC 5856 also produced significant (P < 0.05) amounts of propionic acid and butyric acid while fermenting cholesterol‐rich foods. The multitudinous ways by which B. coagulansMTCC 5856 reduces cholesterol levels endorses its application in functional food formulations and as a dietary ingredient for the management of hypercholesterolemia, potentially reducing the incidence of coronary heart disease and other related disabilities.