OBJECTIVE: The mechanism of nutrient sensing in the upper small intestine (USI) and ileum that regulates glucose homeostasis remains elusive. Short-term high-fat (HF) feeding increases taurochenodeoxycholic acid (TCDCA; an agonist of farnesoid X receptor (FXR)) in the USI and ileum of rats, and the increase of TCDCA is prevented by transplantation of microbiota obtained from the USI of healthy donors into the USI of HF rats. However, whether changes of TCDCA-FXR axis in the USI and ileum alter nutrient sensing remains unknown. METHODS: Intravenous glucose tolerance test was performed in rats that received USI or ileal infusion of nutrients (i.e., oleic acids or glucose) via catheters placed toward the lumen of USI and/or ileum, while mechanistic gain- and loss-of-function studies targeting the TCDCA-FXR axis or bile salt hydrolase activity in USI and ileum were performed. RESULTS: USI or ileum infusion of nutrients increased glucose tolerance in healthy but not HF rats. Transplantation of healthy microbiome obtained from USI into the USI of HF rats restored nutrient sensing and inhibited FXR via a reduction of TCDCA in the USI and ileum. Further, inhibition of USI and ileal FXR enhanced nutrient sensing in HF rats, while inhibiting USI (but not ileal) bile salt hydrolase of HF rats transplanted with healthy microbiome activated FXR and disrupted nutrient sensing in the USI and ileum. CONCLUSIONS: We reveal a TCDCA-FXR axis in both the USI and ileum that is necessary for the upper small intestinal microbiome to govern local nutrient-sensing glucoregulatory pathways in rats.