Green manufacture of steroid precursors from diosgenin by microbial replacing multistep chemical synthesis has been elusive. It is currently limited by the lack of strain and degradation mechanisms. Here, we demonstrated the feasibility of this process using a novel strain Mycolicibacterium sp. HK‐90 with efficiency in diosgenin degradation. Diosgenin degradation by strain HK‐90 involves the selective removal of 5,6‐spiroketal structure, followed by the oxygenolytic cleavage of steroid nuclei. Bioinformatic analyses revealed the presence of two complete steroid catabolic gene clusters, SCG‐1 and SCG‐2, in the genome of strain HK‐90. SCG‐1 cluster was found to be involved in classic phytosterols or cholesterol catabolic pathway through the deletion of key kstD1 gene, which promoted the mutant m‐∆kstD1 converting phytosterols to intermediate 9α‐hydroxyandrostenedione (9‐OHAD). Most impressively, global transcriptomics and characterization of key genes suggested SCG‐2 as a potential gene cluster encoding diosgenin degradation. The gene inactivation of kstD2 in SCG‐2 resulted in the conversion of diosgenin to 9‐OHAD and 9,16‐dihydroxy‐pregn‐4‐ene‐3,20‐dione (9,16‐(OH)2‐PG) in mutant m‐ΔkstD2. Moreover, the engineered strain mHust‐ΔkstD1,2,3 with a triple deletion of kstDs was constructed, which can stably accumulate 9‐OHAD by metabolizing phytosterols, and accumulate 9‐OHAD and 9,16‐(OH)2‐PG from diosgenin. Diosgenin catabolism in strain mHust‐ΔkstD1,2,3 was revealed as a progression through diosgenone, 9,16‐(OH)2‐PG, and 9‐OHAD to 9α‐hydroxytestosterone (9‐OHTS). So far, this work is the first report on genetically engineered strain metabolizing diosgenin to produce 21‐carbon and 19‐carbon steroids. This study presents a promising biosynthetic platform for the green production of steroid precursors, and provide insights into the complex biochemical mechanism of diosgenin catabolism.