Bile acid malabsorption (BAM) is reported in up to 50% of patients with functional diarrhoea and irritable bowel syndrome with diarrhoea (IBS‐D). Serum 7α‐hydroxy‐4‐cholesten‐3‐one (7αHCO or 7αC4), an indirect measurement of hepatic bile acid synthesis, has been validated as a measurement of BAM relative to the ⁷⁵SeHCAT retention test. Our aim was to develop a serum 7αC4 assay, normal values, and compare results from healthy controls, patients with ileal Crohn’s disease or resection, and patients with IBS‐D or IBS with constipation (IBS‐C). Stored serum samples were used from adult men and women in the following groups: 111 normal healthy controls, 15 IBS‐D, 15 IBS‐C, 24 with distal ileal Crohn’s disease and 20 with distal ileal resection for Crohn’s disease. We adapted a published high pressure liquid chromatography, tandem mass spectrometry (HPLC‐MS/MS) assay. The HPLC‐MS/MS assay showed good linearity in concentration range 0–200 ng mL⁻¹, sensitivity (lowest limit of detection 0.04 ng mL⁻¹), and high analytical recovery (average 99%, range 93–107%). The 5th to 95th percentile for 111 normal healthy controls was 6–60.7 ng mL⁻¹. There were significant overall group differences (anovaon ranks, P < 0.001), with significantly higher values for terminal ileal disease or resection. There were significant differences between health and IBS (anova, P = 0.043) with higher mean values in IBS‐D relative to controls (rank sum test, P = 0.027). We have established a sensitive non‐isotopic assay based on HPLC‐MS/MS, determined normal 7αC4 values, and identified increased 7αC4 in IBS‐D and in distal ileal resection and disease. This assay has potential as a non‐invasive test for BAM in IBS.