Various bile acids were added to cultures of encapsulated strains of Staphylococcus aureus growing in serum-soft agar medium of brain heart infusion broth. We examined effects of these compounds on cellular characteristics such as growth type, cell volume index, clumping factor reaction, slime yield, taurine content, and L-(--)-cysteic acid decarboxylase activity. Upon addition to the medium of either taurochenodeoxycholic acid, taurocholic acid (25 to 50 microgram/ml), or cholic acid (10 to 25 microgram/ml), the colonial morphology of taurine-positive cells (strain S-7) was altered from the diffuse to the compact type in serum-soft agar. Also, the titer of the clumping factor reaction increased, while the cell volume index and slime yield were markedly decreased. Tauro-bile acids, including taurocholic acid, taurochenodeoxycholic acid, taurodehydrocholic acid, and taurodeoxycholic acid (50 microgram/ml) inhibited the synthesis of taurine and resulted in decreased L-(--)-cysteic acid decarboxylase activity. Among all of the derivatives cholic acid itself was found to inhibit slime production and L-(--)-cysteic acid decarboxylase activity to the greatest extent. Glyco-bile acid derivatives and taurolicholic acid (50 to 100 microgram/ml) had no effect on L-(--)-cysteic acid decarboxylase activity. Compounds such as glycodeoxycholic acid (50 to 100 microgram/ml) had no effect upon any of the cellular characteristics tested. No effect was observed upon addition of any of these compounds to cultures of the taurine-negative strain (T-26-B). We did find a correlation between the inhibition of taurine biosynthesis and decreased slime production. Electron micrographs indicated that this encapsulated strain was converted to an unencapsulated state in the presence of bile acids.