Diurnal rhythmicity of cellular function is key to survival for most organisms on Earth. Many circadian functions are driven by the brain, but regulation of a separate set of peripheral rhythms remains poorly understood. The gut microbiome is a potential candidate for regulation of host peripheral rhythms, and this study sought to specifically examine the process of microbial bile salt biotransformation. To enable this work, an assay for bile salt hydrolase (BSH) that could work with small quantities of stool samples was necessary. Using a turn-on fluorescence probe, we developed a rapid and inexpensive assay to detect BSH enzyme activity with concentrations as low as 6–25 μM, which is considerably more robust than prior approaches. We successfully applied this rhodamine-based assay to detect BSH activity in a wide range of biological samples such as recombinant protein, whole cells, fecal samples, and gut lumen content from mice. We were able to detect significant BSH activity in small amounts of mouse fecal/gut content (20–50 mg) within 2 h, which illustrates its potential for use in various biological/clinical applications. Using this assay, we investigated the diurnal fluctuations of BSH activity in the large intestine of mice. By using time restricted feeding conditions, we provided direct evidence of 24 h rhythmicity in microbiome BSH activity levels and showed that this rhythmicity is influenced by feeding patterns. Our novel function-centric approach has potential to aid in the discovery of therapeutic, diet, or lifestyle interventions for correction of circadian perturbations linked to bile metabolism.