Obesity is a highly prevalent chronic disease characterized by excessive weight gain and fat accumulation. There is growing evidence that Lactiplantibacillus plantarum strains with bile salt hydrolase (BSH) activity are effective in preventing and alleviating obesity. However, few of them has confirmed the anti-obesity effect of BSH by gene deletion. In this study, 23 BSH-positive Lp. plantarum strains were screened by bile salt precipitation halo assay. Among these strains, Lp. plantarum Lp20 showed the highest BSH activity with a hydrolysis rate to glycodeoxycholic acid (GDCA) by 91.62%. Genomic sequencing and bioinformatics analysis indicated that gene bsh1 was associated with BSH activity of Lp. plantarum Lp20 and gene deletion of bsh1 confirmed the role of Bsh1 in GDCA hydrolysis. To investigate if the Bsh1 from Lp. plantarum Lp20 could alleviate obesity, the wild type and bsh1 deletion mutant strains were administered daily for 8 weeks to diet-induced obese mice, respectively. Compared with mutant strain, the wild type strain Lp20 significantly reduced body weight gain, inguinal white adipose tissue and mesenteric fat mass in obese mice. In addition, Lp20 also reduced serum total cholesterol levels and LDL-C by 20.8% and 33.3%, respectively. Furthermore, the recovered liver steatosis was only observed in Lp. plantarum Lp20 treated mice. Taken together, the bile salt hydrolase Bsh1 from Lp. plantarum Lp20 was a key functional factor on ameliorating HFD-induced obesity by reducing cholesterol levels and suppressing adipogenesis in mice.