To improve its bioavailability and pharmacological effects in humans, red ginseng was fermented with a newly isolated fungus, Monascus pilosus KMU103. Most of the ginsenosides were converted to deglycosylated ginsenocides, such as Rh-1, Rh-2, and Rg(3). The total amount of ginsenosides Rh-1, Rh-2, and Rg(3) was 838.7 mg/kg in the red ginseng, and increased to 4,117 mg/kg after 50 L fermentation in 13% red ginseng and 2% glucose. In addition, the Monascus-fermented red ginseng contained 3,089 mg/kg of monacolin K, one of the metabolites produced by Monascus known to reduce cholesterol in the blood. This newly developed Monascus-fermented red ginseng should result in improved health effects, not only by biotransforming gisenosides to deglycosylated ones but also by creating additional bioactive compounds.