ABSTRACT Major Depressive Disorder (MDD) is characterized by abnormal metabolic profiles along the microbiome‐gut‐brain axis. Bile acids (BAs), a class of steroid compounds regulated by the host and microbes, are increasingly shown to become dysregulated in models of depression. However, the identity of key regulatory BA metabolite in patients with MDD and associated mechanism remain to be clarified. Here, a prospective observational study in patients with depression ( n = 235) and control subjects ( n = 232) for identifying functional BA metabolites regulating depressive behavior and brain functional connectivity is performed. Using comparative metabolomics assay, an increased level of taurocholic acid (TCA) in the serum of patients with MDD is observed, which is reversed by anti‐depressant treatments. Transferring fecal microbiome from patients with MDD induced TCA accumulation to the hippocampus of recipient mice exhibiting depression‐like behavior. TCA supplementation suppressed hippocampal neurogenesis, triggered microglial activation, and elicited depression‐like behavior in mice, which are alleviated by a sphingosine‐1‐phosphate receptor 2 (S1PR2) antagonist. In patients with MDD, functional neuroimaging and spearman correlation analysis revealed that circulating TCA is strongly correlated with functional connectivity in the subregions of hippocampus. The results highlight the potential of harnessing TCA as a prognostic marker and therapeutic target for depression.