The synthesis of bile salt hydrolase has been linked to the health benefit of Lactobacillus reuteri toward lowering blood cholesterol. The aim of this study was to examine the growth and bile salt hydrolysis activity (BSHA) of L. reuteri NCIMB 30242 during milk fermentation with a yogurt starter. There was little growth of L. reuteri during a 4-h co-fermentation with a yogurt culture, and an inoculation of 4.5 × 10⁷ CFU.mL⁻¹ was needed to obtain the 10⁸ CFU.mL⁻¹ target in the product. Enrichment of milk with sugars, minerals, or peptone-based ingredients did not improve growth of L. reuteri . Viable counts of L. reuteri above 1.5 × 10⁸ CFU.mL⁻¹ generated texture defects. Free and microencapsulated (ME) cultures were tested for BSHA in the yogurt drinks. L. reuteri cells which grew during the 4-h lactic fermentation had 40% less BSHA than L. reuteri added directly via the commercial culture. The BSHA of free cells was apparently three times higher than in the ME culture. This study adds data showing that the yogurt production process could affect the functionality of probiotic bacteria.