The mechanism behind the cholesterol lowering effects of apple pomace, a polyphenol- and fibre rich by-product in apple juice production, was investigated. Groups of male F344 rats were fed a control feed or the same feed with 2.1% or 6.5% dry apple pomace with or without seeds for 4 weeks. Effects on plasma cholesterol concentrations, excretion of bile acids, expression of genes involved in cholesterol- and bile acid synthesis, and other markers related to gut health were investigated. We found that pomace feeding decreased total-, LDL- and IDL-cholesterol concentrations compared to control. Higher production of SCFA, indicating elevated caecal fermentation, and increased excretion of total- and primary bile acids could explain the observed hypocholesterolemic effects of apple pomace, however, expression of selected genes involved in cholesterol and bile acid biosynthesis (Hmgcr and Cyp7a1) were not affected. We found no hepatotoxic or other effects of apple seeds. Altogether, our results indicate that apple pomace has beneficial effects on gut health, and that the cholesterol-lowering effect is linked to increased production of SCFA and excretion of bile acids. These effects are most likely linked to the fibre and other fruit constituents present in the pomace. Presence of apple seeds seems to impart no toxicity even at 6.5% pomace in the feed and seeds also had no influence on the biological effect of the pomace. In the future, apple pomace could potentially be used as a bioactive and possibly health promoting food ingredient.