Cholesterol is a waxy substance present in all types of the body cells. The presence of higher concentration of low density lipoprotein (LDL) is characterized by abnormal cholesterol level and is associated with cardiovascular diseases which lead to the development of atheroma in arteries known as atherosclerosis. The transformation of cholesterol by bacterial cholesterol oxidase can provide a key solution for the treatment of diseases related to cholesterol and its oxidized derivatives. Previously isolated bacteria from oil-contaminated soil were screened for cholesterol degradation. Among fourteen, five isolates were able to utilize cholesterol. Two strains Serratia marcescens W1 and Bacillus pumilus W8 using cholesterol as only carbon and energy source were selected for degradation studies. Several parameters (incubation time, substrate concentration, pH, temperature, and different metal ions) for cholesterol decomposition by the selected bacterial strains were evaluated. Maximum cholesterol reduction was achieved on the day of incubation, 1g/L of substrate concentration, pH 7, in the presence of Mg²⁺ and Ca²⁺ ions, and at 35°C. Cholesterol degradation was analyzed by enzymatic colorimetric method, thin layer chromatography (TLC), and high-performance liquid chromatography (HPLC). Under optimized conditions 50% and 84% cholesterol reduction were recorded with Serratia marcescens W1 and Bacillus pumilus W8, respectively. Cholesterol oxidase activity was assayed qualitatively and quantitatively. The results revealed that Serratia marcescens W1 and Bacillus pumilus W8 have great potential for cholesterol degradation and would be regarded as a source for cholesterol oxidase (CHO).