Aims: To isolate a novel endophytic bacterium from Panax ginseng that could have excellent properties in converting ginsenoside Rb1 to ginsenoside Rg3. Methods and Results: Based on a 16S rDNA gene sequence, the strain named GE 17-7 was identified as Burkholderia sp. This strain has shown the highest activity in converting ginsenoside Rb1 to 20(S)-ginsenoside Rg3. During the biotransformation of ginsenoside Rb1, the final metabolite was identified by nuclear magnetic resonance analysis and the transformation pathway of ginsenoside Rb1 was also identified by thin-layer chromatography and high performance liquid chromatography analysis in this study. Conclusions: We have successfully isolated a beta-glucosidase-producing endophytic bacterium GE 17-7 from P. ginseng. Ginsenoside Rg3 was produced by strain GE 17-7 from ginsenoside Rb1 via ginsenoside Rd. Significance and Impact of the Study: This is the first report of the conversion of major ginsenoside Rb1 into minor ginsenoside Rg3 by fermentation with Burkholderia sp. endophytic bacteria in P. ginseng. These results suggest a new preparation method for ginsenoside Rg3 using strain GE 17-7 in the pharmaceutical industry.