Dietary fiber in cereals is an important active substance and is believed to be beneficial to consumer health. To improve the physicochemical and functional properties of highland barley dietary fiber and the integrated utilization of highland barley, Bacillus velezensis submerged fermentation was used to treat highland barley. Soluble and insoluble dietary fibers (SDF and IDF) were isolated and their yield, proximate composition, monosaccharide compositions, physicochemical, structural and functional characteristics were investigated. The results showed that fermentation could significantly increase the SDF yield from 6.07 to 12.57 %. Fermentation changed the monosaccharide composition ratio and rendered SDF and IDF a looser and more porous structure. The crystallinity was also changed significantly. Fermentation improved the water retention capacity and swelling capacity of SDF, while decreased that of IDF. The glucose adsorption ability, glucose delayed dialysis ability, α-glucosidase and α-amylase inhibitory activities of highland barley SDF and IDF were all improved after fermentation, especially for SDF. These results indicated that fermentation is an efficient and environmentally friendly modification method and modified SDF can be utilized in the food processing industry, promoting the high-value application of highland barley dietary fiber.