Emerging evidence suggests the complex interactions between gut microbiota and bile acids, which are crucial end products of cholesterol metabolism. Cholestatic liver disease is characterized by dysfunction of bile production, secretion, and excretion, as well as excessive accumulation of potentially toxic bile acids. Given the importance of bile acid homeostasis, the complex mechanism of the bile acid–microbial network in cholestatic liver disease requires a thorough understanding. It is urgent to summarize the recent research progress in this field. In this review, we highlight how gut microbiota regulates bile acid metabolism, how bile acid pool shapes the bacterial community, and how their interactions contribute to the pathogenesis of cholestatic liver disease. These advances might provide a novel perspective for the development of potential therapeutic strategies that target the bile acid pathway.